Greencore's (GNC) adjusted operating profit dropped 14 per cent in the first half, as the convenience food manufacturer’s sales were battered by coronavirus. Management flagged that in the first six weeks of its second half, weekly demand in the 'food to go' categories declined by up to 70 per cent and currently stands at two-thirds lower than at the same point last year.
The group said that it has recently seen demand patterns beginning to stabilise, although it is far from clear when regular trading conditions will be restored. In light of this, Greencore has temporarily ceased production at its Bow, Atherstone and Heathrow facilities, as well as rationalising production at its Northampton site. The danger exists, however, that the current hiatus may trigger permanent changes in consumer behaviour.
Greencore is taking action to protect its balance sheet, including the suspension of its dividends for 2020 and the next financial year. The manufacturer has furloughed a substantial proportion of staff, cut pay for senior management and reduced non-essential operating costs including recruitment and travel. It has also deferred cash contributions into its legacy defined benefit pension schemes.
Analysts at HSBC forecast full-year pre-tax profits of £77m, compared with £56m in 2019.
| GREENCORE (GNC) | ||||
| ORD PRICE: | 147p | MARKET VALUE: | £656m | |
| TOUCH: | 140-152p | 12-MONTH HIGH: | 282p | LOW: 83p |
| DIVIDEND YIELD: | 0.2% | PE RATIO: | 11 | |
| NET ASSET VALUE: | 76p* | NET DEBT: | 109%** | |
| Half-year to 27 Mar | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
| 2019 | 701 | 5.70 | -0.10 | 2.45 |
| 2020 | 713 | 27.3 | 5.30 | nil |
| % change | +2 | +379 | - | - |
| Ex-div: | na | |||
| Payment: | na | |||
| *Includes intangible assets of £481m, or 108p a share. **Includes lease liabilities of £63.4m. | ||||
