If you were to pick a segment of the economy outstripping a tepid environment for consumer spending, eating on the hop would have to be one of them. The wider food-to-go retail market grew by 5.6 per cent in the six months to the end of March 2016, while the corresponding part of convenience food producer Greencore 's (GNC) business grew by 13 per cent during the same period.
The outperformance was helped by some successful product launches with key customers, including high-street stalwart Marks and Spencer (MKS), as well as other new business wins. Capacity has been expanded at its Northampton site and new production lines have been added at other facilities to cope with increasing demand. The relocation of two major distribution hubs means Greencore distributes more than 4m units per week - almost double the level seen in the 2015 financial year.
Chief financial officer* Alan Williams says the average length of contracts with its customers is four to six years, meaning there would be some insulation for the group if consumer sentiment turned sour. Greencore is now targeting the growing number of high-street brands selling food into the £6.5bn lunchtime market, to help diversify its customer base.
Analysts at Peel Hunt expect adjusted pre-tax profits of £86.5m for the year to September 2016, leading to EPS of 19.5p, up from £77.7m and 18.5p in FY2015.
*18 May 2016: The original article referred to Alan Williams as chief executive officer. This has been corrected.
| GREENCORE (GNC) | ||||
|---|---|---|---|---|
| ORD PRICE: | 380p | MARKET VALUE: | £1.57bn | |
| TOUCH: | 380-380.5p | 12-MONTH HIGH: | 397p | LOW: 263p |
| DIVIDEND YIELD: | 1.7% | PE RATIO: | 29 | |
| NET ASSET VALUE: | 74p* | NET DEBT: | 102% | |
| Half-year to 25 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2015 | 640 | 26.3 | 6.3 | 2.40 |
| 2016 | 692 | 20.8 | 4.9 | 2.55 |
| % change | +8 | -21 | -22 | +6 |
Ex-div: 2 Jun Payment: 4 Oct *Includes intangible assets of £514m, or 124p a share | ||||
