Greencore Group plc ((GB:GNC)) has held its Q4 earnings call. Read on for the main highlights of the call.
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Greencore Group plc’s recent earnings call painted a picture of robust financial health and strategic progress. The company reported record profitability and significant revenue growth, driven by successful new product launches. Despite facing challenges such as inflationary pressures and underperformance in the salad category, these were overshadowed by positive financial metrics and strategic advancements, including the Bakkavor acquisition.
Record Profitability Achieved
Greencore Group plc reached a new milestone in profitability, achieving a 15% return on invested capital (ROIC), marking an impressive 350 basis point increase from the previous fiscal year. This achievement underscores the company’s effective capital management and strategic focus.
Strong Revenue Growth
The company reported a revenue of just under GBP 2 billion for FY 2025, reflecting a 7.7% year-on-year growth. This substantial increase highlights Greencore’s ability to expand its market presence and capture new opportunities.
Significant Operating Profit Increase
Greencore’s adjusted operating profit surged by 28.9% year-on-year to GBP 125.7 million. This growth in operating profit demonstrates the company’s operational efficiency and successful cost management strategies.
Successful New Product Launches
The company launched 534 new products in collaboration with its customers, averaging over 10 new products per week. This innovation in product offerings has been a key driver of Greencore’s recent success.
Operational Excellence Improvements
Operational excellence initiatives resulted in a 4% increase in units per labor hour from FY 2024 and a 10% increase since FY 2023, showcasing the company’s commitment to improving productivity and efficiency.
Strong Free Cash Flow
Greencore recorded a free cash inflow of GBP 120.5 million, with a free cash flow conversion of 66.5%. This strong cash flow position supports the company’s strategic investments and shareholder returns.
Bakkavor Acquisition Progress
The acquisition of Bakkavor is progressing as planned, with a positive Phase 1 decision from the CMA and expected completion in early 2026. This strategic move is anticipated to enhance Greencore’s market position and operational capabilities.
Dividend Increase
The Board has recommended a dividend of 2.6p per share, representing a 30% increase year-on-year. This increase reflects the company’s strong financial performance and commitment to returning value to shareholders.
Challenges in the Salad Portfolio
Despite the overall positive performance, the salad portfolio faced challenges, underperforming compared to other segments. This highlights an area for potential improvement and strategic focus.
Water Reduction Target Missed
Greencore did not meet its in-year target for water reduction due to high water usage at a couple of sites. This shortfall indicates the need for enhanced sustainability efforts in certain areas.
Inflationary Pressures
The company experienced approximately GBP 45 million in inflationary pressures, primarily from labor and materials costs. Managing these pressures will be crucial for maintaining profitability.
Forward-Looking Guidance
Looking ahead, Greencore anticipates continued profitable growth, driven by new contract onboarding, particularly in the ready meals segment. The company plans to complete the Bakkavor acquisition by early 2026, expecting at least GBP 80 million in cost synergies. Greencore remains focused on enhancing shareholder value through disciplined capital allocation and strategic investments.
In summary, Greencore Group plc’s earnings call highlighted a strong financial performance, marked by record profitability and revenue growth. The company’s strategic initiatives, including new product launches and the Bakkavor acquisition, position it well for future growth. While challenges such as inflationary pressures and underperformance in the salad category exist, the overall sentiment remains positive, with a focus on continued success and shareholder value enhancement.