Greencore shares surged on Tuesday, after the sandwich maker reported third quarter revenues well ahead of analyst expectations.
The Dublin-based food group saw revenue for the 13 weeks to June 27th – Greencore’s third fiscal quarter – rise 9.9 per cent to £511.1 million (€588 million), it said in a statement.
That was well ahead of the 3.3 per cent average increase expected by analysts, according to stockbroker Davy. Sales are up 7.6 per cent for the fiscal year to date, Greencore added.
“As we enter our seasonally-important Q4, our focus remains on maintaining momentum in our business,” chief executive Dalton Philips said. “While we are mindful of an uncertain economic backdrop and ongoing inflationary pressures, we now expect to deliver a full year adjusted operating profit of £118-121 million, ahead of previous guidance.”
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Shares in the London-listed company jumped as much as 11.4 per cent, hitting their highest level in at least five years.
Much of the revenue growth came amid the “favourable summer weather”, Greencore said, as well as new business wins. The company is the biggest sandwich producer in the UK market and one of the biggest makers of ready meals. It counts the likes of Marks & Spencer and Tesco among its customers.
Traditionally, it benefits from good weather as more workers tend to buy a takeaway lunch when the sun is out.
“Greencore delivered a robust Q3 trading performance, with reported revenue growth of 9.9 per cent driven by strong, broad-based momentum across both categories,” Davy analysts, including Gary Martin, said in a research note.
“Profit conversion was ahead of expectations in Q3 2024 and the group now anticipates FY25 adjusted operating profit to be in the range of £118–121 million. At first look, we see upside to our current forecasts,” Davy added.
Volume increases accounted for 6.8 percentage points of the jump in revenue, with price increases to offset inflation making up the remaining 3.1 percentage points.
Greencore remains on track to complete its £1.2 billion purchase of rival Bakkovor in “early 2026”, Mr Philips said, subject to regulatory approval.
The UK Competition and Markets Authority (CMA) said earlier this month that it was inviting interested parties to file comments with it as part of its so-called phase one inquiry into the transaction.
“CMA is considering whether it is or may be the case that this transaction, if carried into effect, will result in the creation of a relevant merger situation under the merger provisions of the Enterprise Act 2002 and, if so, whether the creation of that situation may be expected to result in a substantial lessening of competition within any market or markets in the United Kingdom for goods or services,” the agency said at the time.
Greencore secured backing from Bakkavor’s board in April for a deal to create a leading convenience food business in the UK with a combined revenue of £4 billion and about 30,500 employees. It would see existing Greencore investors own 56 per cent of the group, with Bakkavor investors holding the remainder.
