Greencore upgrades full year outlook after ‘Excellent Performance’ in Q3

Greencore Sees Improved Profit Forecast Despite Revenue Decline

Greencore, the UK’s largest sandwich maker, has upgraded its full-year outlook following what it described as an “excellent performance” in Q3, despite a drop in reported sales. The company now anticipates its full-year adjusted operating profit to be between £88 million and £90 million, surpassing its previous forecast of £86 million to £88 million.

Q3 Financial Highlights and Challenges

For the 13 weeks ending June 28, Greencore reported a 6.1% decline in revenue to £465.2 million. The decrease was primarily attributed to the sale of its Trilby Trading business and the exit from several low-margin contracts last year. However, on a like-for-like basis, sales increased by 1.4%, reflecting the company’s resilience in a challenging environment.

Greencore’s CEO, Dalton Philips, praised the company’s performance during this “tough comparative period,” noting that the growth was driven by “continued improvement in profit conversion” through impactful operational and commercial initiatives.

Strategic Initiatives Drive Profit Conversion

Philips highlighted that ongoing operational and commercial initiatives are being implemented at pace, contributing to the improved profit conversion in the quarter. This strategic focus is expected to continue driving the company’s growth trajectory, even as it navigates a complex market environment.

Impact of E.coli Crisis and Recovery

Despite the positive outlook, Greencore faced significant challenges earlier this year due to its involvement in the E.coli supermarket sandwich crisis. Major UK retailers, including Asda, Morrisons, Sainsbury’s, and the Co-op, were forced to recall sandwiches, wraps, and salads after the FSA linked an outbreak of E.coli to contaminated lettuce leaves.

Both Greencore and fellow supplier Samworth Brothers have since confirmed that their products are back on shelves. However, the incident has had lasting implications, with reports emerging that Tesco and Asda are facing legal action from customers affected by the crisis, which resulted in over 120 hospitalizations and one confirmed death.

Future Outlook

Despite these setbacks, Greencore remains optimistic about its future performance, supported by its robust operational strategy and a focus on improving profit margins. The company’s ability to adapt and implement effective initiatives has positioned it well to meet its upgraded financial targets.