Greencore lifts annual guidance after strong Q3

Convenience foods manufacturer Greencore lifted annual profits guidance after a strong third quarter as Covid lockdown measures were relaxed.

The company on Tuesday said it now expected a fiscal 2021 adjusted operating profit of between £36m -£40m against previous guidance of higher than 2020’s £32.5m

Greencore warned that supply chain and labour challenges were increasing across the UK food system and the group was working closely with customers and suppliers to mitigate the impact and maintain "strong operational service levels".

For the 13 weeks to June 25, revenue grew 49.7% above prior year levels to £360.2m and was only 2.8% below equivalent pre-Covid levels in the third quarter of 2019, Greencore said, adding that revenue momentum had “remained encouraging in the first three trading weeks of July”.

“The UK trading environment improved markedly in Q3 as the economy reopened and mobility restrictions were eased, supporting demand growth in food to go categories in particular,” the company said.

“In addition to the underlying market recovery, the group benefited from its strong market position in the grocery retail channel, its customer and format mix, and its portfolio across food to go and other convenience categories. Group revenue growth in Q3 was also supported by an increasing contribution from new business wins.”

Net debt excluding lease liabilities at the end of 2021 was anticipated to be below £240m.