Greencore, the sandwich-maker, has reported its first half results for the 26 weeks ending 29 March 2019.

The group reported revenues from continuing operations down 4.6% to £701.4m in the first half. Operating profits rose 0.9% to £44.7m with margins expanding by 40bps to 6.4%. Its food-to-go revenues (pro-forma) totalled £447.1m, up 7% on a reported basis.

Capital structure

Commenting on the results, Patrick Coveney, chief executive officer, said Greencore has had a good first half to the year, with clear financial and operational progress. He added that the group has reshaped and strengthened its capital structure, and now has a “robust foundation from which to pursue a range of new food-to-go products and channel opportunities”.

The group says it anticipates underlying revenue growth in its key convenience food categories

Greencore, which is now primarily focused on the UK food market, anticipates trading conditions to remain challenging in the seasonally more important second half of the year.

The group says it anticipates underlying revenue growth in its key convenience food categories and that this will underpin growth in operating profit in the full year.

The disposal of its entire US business to Hearthside Foods, which took place last November, is now complete. Net debt at the end of the first half decreased by £217m to £284m.

The group made a profit on disposal of £56.7m. Following the disposal, the group returned £509m to shareholders in the form of a tender offer, which was executed at the end of January this year. There was a £25.4m one-off charge as a result of restructuring its debt and the removal of US dollar assets.

The group reported adjusted earnings per share growth of 16.4% to 6.4p. It also declared an interim dividend of 2.45p.

Comment

While Greencore does have a considerably stronger balance sheet and a higher returns profile, achieving growth in this market will be challenging. That said, it is the leader in fresh sandwiches in the UK where it manufactures around 700m sandwiches and other food-to-go products annually. It also has 15 manufacturing sites across the UK, with industry-leading technology and supply chain capabilities which should make it a highly efficient manufacturer.