Bakery chain Greggs (GRG) is roughly five years into its plan to reshape its business, aimed at making it more efficient and prepared to take advantage of the growing food-to-go market. But poor weather in March and April has thrown a spanner in the works. Quite a sizeable spanner at that: it culminated in a profit warning in May which revealed that full-year profits would fall flat after a significant sales slowdown in the wake of unseasonal ice and snow and poor consumer footfall.
At the halfway stage, underlying operating profits fell 7 per cent to £25.7m, after operating margins contracted from 6.1 per cent to 5.4 per cent as the company tried to deal with disruption. Asked whether the recent heatwave had improved matters, chief executive Roger Whiteside said demand for cold options was strong, but agricultural yields are under pressure, suggesting higher input costs, while higher energy prices are also acting as an additional headwind. So Mr Whiteside could do no better than reiterate renewed guidance for flat full-year profits.
Prior to these results, analyst at Peel Hunt expected adjusted pre-tax profits of £81.7m for 2018, giving EPS of 62.3p, compared with £81.8m and 61.8p in 2017.
| GREGGS (GRG) | ||||
| ORD PRICE: | 1,031p | MARKET VALUE: | £1.04bn | |
| TOUCH: | 1,030-1,032p | 12-MONTH HIGH: | 1,400p | LOW: 939p |
| DIVIDEND YIELD: | 3.2% | PE RATIO: | 17 | |
| NET ASSET VALUE: | 301p | NET CASH: | £43.5m | |
| Half-year to 30 June | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2017 | 453 | 19.4 | 15.1 | 10.3 |
| 2018 | 476 | 24.1 | 18.9 | 10.7 |
| % change | +5 | +24 | +25 | +4 |
| Ex-div: | 06 Sep | |||
| Payment: | 04 Oct |
