Greencore hikes final dividend after 'strategic reset'

Convenience food manufacturer Greencore Group reported pro forma revenue growth of 2.6% in its continuing operations as part of its full-year results on Tuesday, which it said was driven by 3.3% growth in food-to-go categories.

The FTSE 250 company said overall revenue was down 3.5% for the 12 months ended 27 September, however, at £1.45bn.

Its adjusted operating profit rose 0.9% to £105.5m, which the board said represented a 30 basis point improvement in adjusted operating margin, while adjusted earnings per share were ahead 6.0% at 16p.

Greencore reported a “strong improvement” in free cash flow conversion on an underlying basis, although free cash flow itself was down £37.5m to £54.9m.

Operationally, the company said it completed the “strategic reset” of the group during the year, following the disposal of the US business, and reshaped its capital structure, including the return of £509.0m of capital to shareholders.

It also acquired Freshtime, which it described as a well-established supplier of meal salads and chilled snacking in the UK, in September.

Net debt stood at £288.5m, which was a reduction of £212.6m since the end of the 2018 financial year, with net debt-to-EBITDA at 1.8x, as measured under financing agreements, compared to 2.3x a year earlier.

The board proposed an 11.3% increase in the total dividend, to 6.20p.

“Over the past 12 months we have fundamentally reset our business, anchored by a clear strategy to drive shareholder value by expanding our category and channel capabilities within the diverse, growing and attractive UK food-to-go market,” said chief executive officer Patrick Coveney.

“The evidence of this can be seen in the launch of multiple commercial and innovation projects with key customers, and in the recent acquisition of Freshtime.

“As a result of this reset strategy, we anticipate another year of profitable growth in the 2020 financial year.”