Greencore revenue falls 15pc as Covid hits demand
GREENCORE shares fell 1.5pc yesterday after the company reported a 15pc fall in quarterly revenue for the three months ended on December 25.
The convenience foods group said that as a result of new lockdowns introduced in the UK earlier this month, group revenues were running 20pc below year-ago levels and it declined to reinstate guidance for the current year.
At one stage, the company stock was down more than 4.5pc in London trading.
Pro-forma revenue in the group’s food-to-go categories is currently running approximately 35pc below the prior year level, it said.
CEO Patrick Coveney said it had been “another challenging period” for the group.
“Although the difficult trading conditions are likely to persist in the near term, we remain confident that demand for our food-to-go categories will recover strongly as the effects of Covid-19 recede and mobility restrictions are removed,” Mr Coveney said.
Revenues at the convenience food group for its fiscal first quarter dropped to £312.7m (€352m) from £367.8m in the corresponding period of the prior year.
The drop in revenue reflected the impact of Covid-related restrictions on demand for food-to-go categories, according to a trading update from the company. Looking specifically at this arm of the business, revenue was £188.5m in quarter one, a decrease of 21.7pc.
Greencore said the recovery that was evident at the end of financial year 2020 was impeded by the tiered regional restrictions introduced across the UK in October.
Demand was further affected by a subsequent national lockdown until early December, followed by the implementation of tiered regional lockdowns in the UK.
Reported revenue in the group’s other convenience food categories was £124.1m during the period, a decrease of 2.1pc year-on-year.
During the final quarter of last year, Greencore said it had continued to focus on cost and cash flow management, including the renewed use of furlough supports, pay freezes, elimination of discretionary spending, and a reduction in planned capital expenditures.
These initiatives supported the delivery of positive adjusted operating profit and adjusted earnings before interest, taxation, depreciation, and amortisation (Ebitda) in quarter one.
The company said its liquidity and balance sheet has been strengthened through revised debt financing agreements and a successful equity placing where it raised gross proceeds of £90m.
This, Greencore said, protects the business in the near term and supports “delivery of value-creating opportunities as trading conditions recover”.
Davy analyst Roland French said Greencore’s quarter one trading was “broadly in line with our forecasts and highlighted a resilient revenue outturn in the context of the mobility backdrop”.
“In the context of the most recent lockdown, we see downside risk to our FY (fiscal year) 2021 forecasts, though envisage no changes to FY 2022 estimates,” Mr French said.