This should have been a very difficult first half for convenience food producer Greencore (GNC), what with the horsemeat scandal and the coldest March on record since 1962, but the group cantered through the difficult UK retail environment on the back of strong performances from its new US operations.
Pre-tax profits, after adjusting for exceptional items and currency movements, rose 9.9 per cent year-on-year to £26.5m to beat analysts’ expectations slightly. That’s because after integrating several US acquisitions last year, and signing a food-to-go provision contract with Starbucks, Greencore is finally starting to see strong organic growth across the pond nearly five years after entering the market. This has helped to mitigate decent but lower like-for-like sales in the UK ready meals segment, which fell 5.9 per cent in the first half due to the horsemeat fallout.
Chief financial officer Alan Williams remains bullish on opportunities to grow the US business. He expects the unit to continue growing revenues while turning in a small profit this year, having managed to break-even in the first half.
Broker Numis Securities forecasts EPS of 14.3p in 2013 (2012: 12.6p).
GREENCORE (GNC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 122p | MARKET VALUE: | £485m | |
| TOUCH: | 121-122p | 12-MONTH HIGH: | 122p | LOW: 69p |
| DIVIDEND YIELD: | 3.6% | PE RATIO: | 9 | |
| NET ASSET VALUE: | 48p* | NET DEBT: | 138% | |
| Half-year to 29 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2012 | 568 | 15.8 | 4.0 | 1.75 |
| 2013 | 573 | 14.1 | 5.5 | 1.90 |
| % change | +1 | -11 | +38 | +9 |
Ex-div: 5 Jun Payment: 3 Oct *Includes intangible assets of £504m, or 127p a share | ||||
