The acquisition of US-based Peacock Foods, completed in December 2016, contributed to a near-doubling in half-year revenue at Greencore (GNC). The deal fed into a 13.2 per cent rise in adjusted net profits, to £37.8m, which was achieved despite higher tax and financing charges. However, it also meant that net debt increased by 68 per cent from the year-end to £557m, representing 2.7 times cash profits (Ebitda). The group is now working towards generating $16m (£12.4m) in core synergies from the acquisition.
New contract wins in the UK, including deals with Sainsbury and Marks and Spencer, added to the "transformational" period, as chief executive Patrick Coveney dubbed it. The group operating margin dipped slightly to 5.5 per cent from 6.3 per cent during the comparable period, a reflection of increased investment in its UK facilities and increased cost-push inflation, although management has instigated price increases to offset the latter dynamic.
Analysts at Whitman Howard expect pre-tax profits of £122m for the September 2017 year-end, giving EPS of 16.1p, up from £75m and 15.8p in FY2016.
| GREENCORE (GNC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 245p | MARKET VALUE: | £1.73bn | |
| TOUCH: | 244.7-245.1p | 12-MONTH HIGH: | 304p | LOW: 193p |
| DIVIDEND YIELD: | 2.4% | PE RATIO: | 31 | |
| NET ASSET VALUE: | 103p* | NET DEBT: | 76% | |
| Half-year to 31 Mar | Turnover (£bn) | Pre-tax profit (£m) | Earnings per share (p) ** | Dividend per share (p) |
|---|---|---|---|---|
| 2016 | 0.69 | 20.8 | 4.0 | 2.1 |
| 2017 | 1.01 | 11.7 | 1.7 | 2.1 |
| % change | +46 | -45 | -58 | - |
Ex-div: 1 Jun Payment: 3 Oct *Includes intangible assets of £1.16bn, or 164p a share ** H116 EPS and dividend restated to reflect Dec 2016 9-for-13 rights issue | ||||
