Shares in bakery business Greggs (GRG) have had a rocky road post-referendum, so a solid set of interim results is just what investors needed. Like-for-like sales rose 3.8 per cent during the first half of the financial year, which was a decent performance against a tough comparable (5.9 per cent in the first half of 2015), and factoring in particularly poor weather in June.
Total sales grew by 6 per cent to £422m - ahead of brokerage Peel Hunt's expectations - reflecting the opening of 32 net new stores and growing demand for the group's 'balanced choice' healthy food range and breakfast menu. On a net basis, 70 stores should be opened over the entire financial year, which would give the company close to 1,800 operating sites.
In the first six months the group made a gain on property disposals of £2.2m, but even excluding this helpful bump operating profits increased by 6.7 per cent to £27.2m. That adjusted figure also excludes costs associated with Greggs' plan to close three manufacturing sites this year; £4.8m worth of one-off expenses were recognised in the first half, with £2.8m expected to be booked subsequently.
Analysts at Peel Hunt expect pre-tax profits of £78.4m for the year ending December 2016, giving EPS of 59.2p, up from £73m and 55.8p in 2015.
GREGGS (GRG) | ||||
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ORD PRICE: | 1,057p | MARKET VALUE: | £1.07bn | |
TOUCH: | 1,054-1,060p | 12-MONTH HIGH: | 1,359p | LOW: 869p |
DIVIDEND YIELD: | 2.9% | PE RATIO: | 19 | |
NET ASSET VALUE: | 244p | NET CASH: | £35m |
Half-year to 2 July | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
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2015 | 398 | 25.6 | 20.0 | 7.4 |
2016 | 422 | 25.4 | 19.7 | 9.5 |
% change | +6 | -1 | -2 | +28 |
Ex-div: 8 Sep Payment: 7 Oct |