TIDMGNC
RNS Number : 2254U
Greencore Group PLC
28 July 2020
28 July 2020
Greencore Group plc
Progressive improvement in demand during Q3; well positioned to
build back the business
Greencore Group plc ("Greencore" or the "Group") a leading
manufacturer of convenience foods in the UK, today issues a trading
update covering the 13 weeks from 27 March to 26 June 2020 ("Q3" or
"the quarter").
Q3 Highlights (1,2)
-- Focused on three priorities - keeping our people safe,
feeding the UK, and protecting our business
-- Group revenue down 36.0% on a pro forma basis in Q3, but 23%
below prior year levels in July to date
-- Encouraging sequential improvement of demand in food to go categories through Q3 and into Q4
-- Production recommenced at the Group's Bow, Atherstone and Heathrow facilities
-- Delivered positive Adjusted EBITDA for the quarter
-- Strong liquidity to both support the business in the near
term and to build back as the pandemic eases
-- Well positioned to capture new business opportunities in a changing marketplace
Performance and Outlook (1,2)
Revenue Growth
Q3 9 months
--------------------- ---------------------
Reported Pro forma Reported Pro forma
--------- ---------- --------- ----------
Group -34.1% -36.0% -10.6% -12.4%
--------- ---------- --------- ----------
Food to go categories -50.6% -52.5% -16.9% -20.2%
--------- ---------- --------- ----------
Other convenience food
categories +2.2% +1.8% +1.4% +3.3%
--------- ---------- --------- ----------
Pro Forma Revenue Growth
April 2020 May 2020 June 2020 July 2020(2)
----------- --------- ---------- -------------
Group -43% -40% -27% -23%
----------- --------- ---------- -------------
Food to go categories -63% -58% -41% -35%
----------- --------- ---------- -------------
Other convenience food
categories +0% +1% +3% +7%
----------- --------- ---------- -------------
The Group continues to manage through this challenging trading
environment by focusing on its three priorities - keeping our
people safe, feeding the UK, and protecting our business. The
organisation, supply chain, commercial relationships and production
network have remained resilient during this testing period.
Reported Group revenue was GBP240.6m in Q3, a decrease of 34.1%
on the prior year, primarily reflecting the impact of COVID-19 on
food to go categories during the period. On a pro forma basis
revenue decreased by 36.0% in the quarter.
COVID-19 has had a dramatic and volatile impact on UK food
consumption patterns in the period. The Group has partnered closely
with its customers to develop and re-activate product ranges as
they reopen formats and channels. In this context the Group has
recommenced production at its Bow, Atherstone and Heathrow
facilities and has extended production at its Northampton site as
demand trends improve.
Year to date, the Group ' s reported revenue was GBP953.3m, a
decrease of 10.6% on the prior year, again reflecting the impact of
COVID-19 on performance at the end of Q2 and during Q3. On a pro
forma basis, Group revenue decreased by 12.4%.
In the Group ' s food to go categories, reported revenue was
GBP123.8m in Q3, a decrease of 50.6%. Pro forma Q3 revenue
decreased by 52.5%. Revenues have recovered progressively as
restrictions on population movements have eased. On a pro forma
basis, demand in food to go categories declined by 63% in April, by
58% in May, and by 41% in June, as the Group's customers' formats
and locations have met the emerging demand. This has continued in
July to date, where revenues from the Group's food to go categories
were 35% below prior year levels. In the 9 months to the end of Q3,
reported revenue in food to go categories was GBP579.6m, a
reduction of 16.9% on a reported basis.
Reported revenue in the Group ' s other convenience food
categories totalled GBP116.8m in Q3, an increase of 2.2% on a
reported basis, and a 1.8% increase on a pro forma basis. In the 9
months to the end of Q3, reported revenue increased by 1.4% to
GBP373.7m.
The Group has responded quickly and decisively to the impacts of
COVID-19, and its extensive range of mitigating actions, together
with an improving revenue trajectory, delivered positive Adjusted
EBITDA for the quarter.
The Group secured formal agreement with its bank lending
syndicate and its Private Placement Note Holders to waive the Net
Debt: EBITDA covenant condition for the September 2020 and March
2021 test periods. It also received confirmation of its eligibility
to access funding under the Covid Corporate Financing Facility
("CCFF") although the Group has not issued under this facility.
These initiatives, along with the measures to mitigate cash
outflows, provide the Group with strong liquidity to support the
business in the near term and to ensure it is well positioned to
build back the business and to capture new business opportunities
as the pandemic eases.
Given the ongoing level of uncertainty around the possible
duration and impact of COVID-19, the Group ' s financial guidance
for FY20 remains suspended, as announced on 30 March, and the Group
' s outlook as included in the FY19 Full Year Results Statement and
FY20 Q1 Trading Update should no longer be considered current.
The Group has also separately announced today that it has
entered into a conditional agreement to sell its interests in its
molasses trading businesses to United Molasses Marketing (Ireland)
Limited and United Molasses Marketing Limited.
Greencore will report its FY20 results on 24 November 2020.
Commenting on the performance, Patrick Coveney, Chief Executive
Officer, said:
" I am hugely proud of the way in which our teams have responded
during this extraordinarily challenging period. The decisive
actions that we have taken are enabling us to keep our people safe,
helping to feed the UK, and protecting our business. Our Group has
traded resiliently, with our deep customer relationships
strengthened further, and we are encouraged to see a sustained
improvement in demand and category mix. We remain confident in the
relevance and attractiveness of the food to go channels and
categories that we serve. In addition, we are well positioned for
new business opportunities and a return to growth as the pandemic
subsides."
Conference Call
A conference call for investors and analysts will be held at
8.30am today. Registration and dial in details are available at
www. greencore.com/investor-relations/
For further information, please contact:
Patrick Coveney Chief Executive Officer Tel: +353 (0) 1
486 3313
Emma Hynes Chief Financial Officer Tel: +353 (0) 1
486 3307
Jack Gorman Head of Investor Relations Tel: +353 (0) 1
486 3308
Rob Greening or Powerscourt Tel: +44 (0) 20
Sam Austrums 7250 1446
Billy Murphy or Drury | Porter Novelli Tel: +353 (0) 1
Louise Walsh 260 5000
(1) Pro forma references throughout this statement are on a
constant currency basis. Reported revenue in the current year is
adjusted to reflect the ownership of Freshtime for the full period
in FY19 and excludes the impact of revenue from the exit of longer
life ready meals manufacturing at the Kiveton facility in H1 19
(2) Three weeks to 17 July 2020
About Greencore
Greencore is a leading manufacturer of convenience food in the
UK. It supplies grocery and other retailers including all of the
major UK supermarkets. The Group has strong market positions in a
range of categories including sandwiches, salads, sushi, chilled
snacking, chilled ready meals, chilled soups and sauces, chilled
quiche, ambient sauces and pickles, and frozen Yorkshire
Puddings.
The Group's medium term financial ambitions are for mid
single-digit organic revenue growth, high single-digit Adjusted EPS
growth, the conversion of half of its Adjusted EBITDA to Free Cash
Flow and for mid-teen ROIC.
For further information go to www.greencore.com or follow
Greencore on social media.
This announcement is based on information sourced from unaudited
management accounts.
Certain statements made in this Trading Update are
forward--looking. These represent expectations for the Group ' s
business, and involve known and unknown risks and uncertainties,
many of which are beyond the Group ' s control. The Group has based
these forward--looking statements on current expectations and
projections about future events. These forward-looking statements
may generally, but not always, be identified by the use of words
such as ' will ' , ' aims ' , ' anticipates ' , ' continue ' , '
could ' , ' should ' , ' expects ' , ' is expected to ' , ' may ' ,
' estimates ' , ' believes ' , ' intends ' , ' projects ' , '
targets ' , or the negative thereof, or similar expressions.
By their nature, forward-looking statements involve risk and
uncertainty because they relate to events and depend on
circumstances that may or may not occur in the future and reflect
the Group's current expectations and assumptions as to such future
events and circumstances that may not prove accurate. A number of
material factors could cause actual results and developments to
differ materially from those expressed or implied by
forward-looking statements. You should not place undue reliance on
any forward-looking statements. These forward-looking statements
are made as of the date of this Trading Update. The Group expressly
disclaims any obligation to publicly update or review these
forward-looking statements other than as required by law.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
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