Greencore's chief executive Patrick Coveney says he has seen no sign that the UK's challenging market conditions will ease – but that didn't stop the convenience food manufacturer from reporting impressive half-year figures. While overall growth was flattered by last year's acquisition of Uniq, underlying sales climbed a healthy 9.3 per cent, largely driven by higher sales volumes. And, with with further integration benefits to come, the shares look an appetising proposition.
After the expensive failure of a planned merger with Northern Foods, buying Uniq was a sensible move in a market that, facing pressure from rising input costs and difficult consumer markets, needed to consolidate. Although Uniq is currently less profitable than the core Greencore business, and dragged overall operating margins down 50 basis points to 5.6 per cent, Mr Coveney is confident that cost synergies will see these recover by 2013.
Greencore has also set its sights on further expansion in the US. Having made its first foray into the market four years ago, the purchase of MarketFare in April adds significant scale. The business now has annual turnover of around $160m (£101m), but Mr Coveney expects a big jump over the next three to five years.
Broker Investec expects normalised full-year pre-tax profits of £54m and EPS of 12.3p (£35.3m and 10.5p in 2011).
GREENCORE (GNC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 72p | MARKET VALUE: | £277m | |
| TOUCH: | 71-72p | 12-MONTH HIGH: | 85p | LOW: 46p |
| DIVIDEND YIELD: | 5.1% | PE RATIO: | 6 | |
| NET ASSET VALUE: | 53p* | NET DEBT: | 126% | |
| Half-year to 30 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2011 | 379 | 2.13 | -0.20 | 1.92** |
| 2012 | 568 | 15.8 | 4.00 | 1.75 |
| % change | +50 | +642 | - | -9 |
Ex-div: 6 Jun Payment: 3 Oct *Includes intangible assets of £471m, or 122p a share **2011 half-year dividend of €0.03, or €0.0238 a share when adjusted for July 2011's rights issue | ||||
