Much of the sales acceleration at baker Greggs (GRG) isn’t showing up at the bottom line. That’s because the company is in an investment-heavy phase, spending big to consolidate manufacturing operations and expand logistics capacity. A new shop replenishment system was also rolled out last year, and a new supply chain solution was also piloted. Adjusted operating profits – which exclude property profits and one-off expenses – rose 4.6 per cent to £81.7m.
Despite the challenging consumer backdrop, Greggs is pushing ahead with plans to invest £100m by 2020. This year marks a 'peak' for supply chain investment, while the company also plans to open a record number of new shops. Last year Greggs opened 131 new sites, closed 41 and had 1,854 trading shops by the year-end. So far, the new year is off to a good start: during the eight weeks ended 24 February, like-for-like sales are 3.2 per cent ahead of last year.
Analysts at Shore Capital had forecast adjusted pre-tax profit of £88.2m and EPS of 68.2p (from £82.6m and 63.6p in 2017) for the year ending December 2018, but note that these numbers are likely to be revised down.
GREGGS (GRG) | ||||
ORD PRICE: | 1,323p | MARKET VALUE: | £1.34bn | |
TOUCH: | 1,322-1,324p | 12-MONTH HIGH: | 1,400p | LOW: 957p |
DIVIDEND YIELD: | 2.4% | PE RATIO: | 23 | |
NET ASSET VALUE: | 296p | NET CASH: | £54.5m |
Year to 30 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
2013 | 762 | 33.2 | 24.1 | 19.5 |
2014 | 806 | 49.7 | 37.4 | 22.0 |
2015 | 836 | 73.0 | 57.3 | 28.6 |
2016 | 894 | 75.1 | 57.8 | 31.0 |
2017 | 960 | 71.9 | 56.6 | 32.3 |
% change | +7 | -4 | -2 | +4 |
Ex-div: | 19 Apr | |||
Payment: | 18 May |