Irish-founded sandwich maker Greencore has launched a second share buyback programme after seeing revenues increase by close to a third during its recently ended financial year on the back of improved sales, increased prices and business wins.
The London-listed convenience food firm recorded turnover of £1.7bn in the 12 months to the end of September, an improvement of 31.3% from 2021 and up 20.3% on 2019 levels.
Adjusted operating profit rose £33.2m year-on-year to £72.2m, and adjusted earnings per share rose 5.5 pence to 9.2 pence. Group return on invested capital was up to 8.4% from 4.5% due to the surge in profitability.
Adjusted profit before tax came in at £59.8m, up £37.2m from £22.6m in 2021, and group profit before tax was measured at £39.8m, up £12m from last year's £27.8m. The group had pre-tax exceptional items of £16.5m relating to reorganisation costs and pension restructuring.
Greencore said the trading environment had been "resilient" during the period, not withstanding some demand volatility caused by Covid restrictions, but that the impact of inflation had been "limited" to date.
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The Dublin-headquartered group completed a £10m share buyback programme in October, and has now commenced a further share buyback programme for up to £15m or 41.3m ordinary shares . The buyback will be completed by the end of May, with Share Capital Stockbrokers acting as principal.
"As previously announced, we plan to return up to £50m over the next two years, initially in the form of this buyback programme and with the ongoing flexibility to return value in the form of buyback, dividends or both," said Gary Kennedy, non-executive chair of Greencore.
"This is underpinned by our strong balance sheet and continued optimism around our business prospects."
The full-year results show reduced net debt of £180m, excluding lease liabilities following the first share buyback programme and strategic capital expenditure of £33.1m, or equal to 1.5x EBITDA, within the group's target range. Greencore has committed facilities of £578m, up from £433.6m in 2021.
The company said the new business accounted for 4.4% of revenue growth and that it had "recovered or mitigated" all inflation to input costs or otherwise. It warned, however, of some commissioning challenges in ramping up production.
Looking ahead, Greencore said revenue performance had held up in the early weeks of the current financial year, but that the firm remains cautious of a recessionary environment and the impact of cost-of-living factors on consumer spending.
"We expect that FY23 will be a year of further substantial inflation and are working closely with our customers on recovery and mitigation," the company directors said.
"The board is confident that a continued focus on the strengths of the business, underpinned by our resilient balance sheet and the efficiency and productivity gains related to our Better Greencore programme will support the further successful progress of the group in the years ahead."
Dalton Philips, CEO of Greencore, who recently joined the company from Dublin Airport, said: "Greencore has made great progress in recovering from a very challenging period with revenue, profits, leverage and returns all improving significantly in FY22.
"My first few weeks in the CEO role have confirmed to me the fantastic capability and potential of this business.
"Our leading market positions, close customer relationships, well invested facilities and intense focus on efficiencies give us confidence as we continue to navigate our way through the challenges of the current macroeconomic climate."
Greencore manufactured 795m sandwiches and other food to go products, 127m chilled prepared meals and 296m bottles of cooking sauces, pickles, condiments and chilled soups in 2022.
The group operates 23 manufacturing sites at 16 UK locations and employs some 14,000 people.
(Pic: Getty Images)
