Convenience food group Greencore has reported a rise in third-quarter sales, boosted by growth across its business.
The company today (31 July) posted a 6.7% increase in underlying sales for the 13 weeks to 29 June.
The 6.7% "core growth" was measured as if Uniq, the UK sandwich firm Greencore acquired last July, was part of the business for the whole of the London-listed firm's previous financial year.
Including the contribution from MarketFare, the US convenience food firm it bought in April, Greencore's third-quarter sales increased 11.1%. Total group sales were up 46.9% on a reported basis at GBP298m.
Greencore did see its sales growth slow in the third quarter. Core sales were up 10.3% in the first nine months of its financial year.
"Performance across the business in the third quarter was somewhat impacted by weather and the Jubilee celebrations. We experienced strong performance in May in the run up to the Jubilee bank holiday helped by some good weather, whereas demand in June was impacted by inclement weather conditions," Greencore said.
However, City analysts welcomed Greencore's trading update despite the slowing sales in the third quarter.
Click here to read analysts' thoughts on Greencore's update.
Greencore Group plc - Interim Management Statement
Greencore Group plc ("the Group") today issues its interim management statement for the period to 30 July 2012. Trading information relates to the Group's Q3 trading period to 29 June 2012.
Current Trading
The Group has continued to perform well in the 13 weeks to 29 June 2012 with headline revenue growth of 46.9% and core growth (assuming Uniq had formed part of the Group throughout the prior year and excluding Desserts product lines which have been or are being exited) of 11.1%, or 6.7% excluding the addition of MarketFare Foods, LLC ("MarketFare") from 18 April 2012.
On a Year to Date basis, reported revenues for the 39 weeks to 29 June 2012 of £865.6m are 48.8% ahead of the comparable period in the prior year with core growth of 10.3% or 8.7% excluding the contribution from MarketFare.
The Convenience Foods division recorded revenue of £277.9m in the 13 weeks to 29 June 2012, an increase of 51.2% on the prior year. The legacy Greencore business recorded volume led revenue growth of 6.6% with good growth across the key category businesses. Inclusion of MarketFare from 18 April boosted this growth rate to 12.8%.
The continuing former Uniq businesses also performed well in the period with underlying revenue growth of 7.3%. The revenue decline in the parts of the Uniq desserts business which are being exited or sold was 52.4%. The everyday desserts category at Minsterley was fully exited at the end of June. Following the announcement on 15 June 2012 of the disposal of the Minsterley facility to Müller, revenues from the sale of Cadbury branded desserts to Müller have now been included within "activity to be exited".
Performance across the business in the third quarter was somewhat impacted by weather and the Jubilee celebrations. We experienced strong performance in May in the run up to the Jubilee bank holiday helped by some good weather, whereas demand in June was impacted by inclement weather conditions.
The integration of Uniq continues to progress in line with expectations. Following the acquisitions of MarketFare on 18 April 2012 and H.C. Schau and Son, Inc in late June together with a significant new contract award, the Group now has a business of scale in the US Food to Go market. A considerable amount of work is under way to integrate the US businesses.
The Ingredients business performed well during the period and delivered revenue growth of 5.1%.
Financial Position
The Group's financial position remains robust with good headroom within existing facilities. Both of the US acquisitions completed during the quarter were funded from existing debt facilities. The Group continues to manage cash tightly and still expects to maintain leverage below 3.0 times at September 2012.
Outlook
The Group continues to perform well despite the challenging and volatile market conditions. Whilst we do not anticipate any material improvement in the trading environment in the near future, we remain confident in our ability to deliver growth in adjusted earnings per share in line with market expectations.
