City Snapshot: Greencore sales rise, but railroad strikes and public holidays hold back recovery | New

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Greencore saw a strong rebound in revenue in its fiscal year ended Sept. 30 as on-the-go consumption returned, although it slowed in the fourth quarter.

Pro forma revenue growth in the fourth quarter reached 25% year-on-year, driven by a combination of increased volumes, a small percentage increase in underlying prices, the integration of new businesses in ready meals and an increase in revenues in the group’s Irish ingredients. commercial enterprise.

Revenue growth of 25% in the fourth quarter was lower than the third quarter growth rate due to a stronger comparative period, the volume impact of the rail strikes and the unexpected holiday, as well as the full-year effect of new contracts won during the corresponding period last year.

Takeout food growth in the fourth quarter was 23% vs. 35% for the full year, while sales of other ready meals were up 29% vs. 19% for the full year. year.

Overall growth in the fourth quarter was also slower compared to growth of 29% for the group as a whole for the full year, driven by a strong recovery in volumes while recovering from significant levels of continued inflation. and improving profits and cash conversion.

Greencore saw a 35% increase in takeaway food categories over the full year, reflecting volume growth, the integration of new business and the impact of rising inflation.

In the fourth quarter, it also completed the integration of new businesses with the strategic capital investment of £30 million in three manufacturing sites.

However, adjusted operating profit will be at the lower end of the previously guided range of £72-77m after absorbing the impact on volume and operations from the rail strikes and the additional September bank holiday.

On a positive outlook, Greencore said it does not currently see an impact from macro concerns as consumer demand has held up well, although it remains vigilant and cautious about the potential impact of cost-of-use factors. life over the coming year.

“We remain focused on recovering inflation through all available mechanisms and are working with our customers and supply partners to mitigate the continued impact of high and persistent industry inflation on consumer prices.” , did he declare.

“We have significantly recovered from the inflation we have experienced over the past 12 months, and we make decisions to bid or renew contracts based on their economics, including the ability to recover inflation.”

Greencore shares are down 1.4% this morning to 68.3p.

morning update

Retail sales rose again in September as higher prices offset lower sales volumes.

BRC-KPMG’s Retail Sales Monitor for September found total sales rose 2.2% year-on-year, above the 3-month average of 1.9% but below the average over 12 months of 2.7%.

Retail sales in the UK increased by 1.8% like-for-like compared to September 2021, when they also fell by 0.6%.

Over the three months to September, food sales increased by 4.6% in total and by 4.2% on a like-for-like basis. This is above the total 12-month average growth of 1.1% and for the month of September, the supply was growing year-over-year.

Non-food retail sales fell by 0.4% over the same three-month period in total and by 1.1% on a like-for-like basis.

In-store non-food sales increased 2.2% on a full scope basis and 1.1% on a like-for-like basis, while online non-food sales fell 2.6% in September, compared to a decline by 7.3% in September 2021.

Helen Dickinson, CEO of BRC, commented: “While UK retail sales increased in September, this represented another month of declining sales volumes given high levels of inflation. As consumer confidence continued to decline, people shopped cautiously, avoiding big-ticket items such as computers, televisions and new furniture. Many households are also preparing for higher energy costs this winter, with blankets, warm clothes and energy-efficient appliances, such as air dryers and air fryers, all selling well.

“A difficult winter is coming for both merchants and consumers. Costs are rising throughout the retailer supply chain, the pound remains weak, interest rates are rising and a tight labor market is driving up the cost of hiring. All of this makes it harder for retailers to cut prices and help struggling households. The industry urgently needs clarity from the government on corporate tariffs next year and is calling for a multiplier freeze. Without it, retailers will face an £800million rise in their bills, which will inevitably put further price pressure on UK consumers.

Paul Martin, head of UK retail at KPMG, added: “Retail sales remained positive in September with growth of more than 2% compared to the same period last year – but a large part of that will be attributed to price increases as sales volume continues to struggle.

“Once again, clothing and footwear came to the rescue on the high street, and back-to-school shopping was a driver of retail growth, with sales of children’s footwear up by more than 15%. Sales of kitchen appliances and accessories also moved into positive territory this month as consumers sought to purchase more energy-efficient kitchen items given rising energy prices. Online sales remain down year-over-year, and categories that saw some growth remained in single digits.

“With interest rates, inflation, labour, energy and the cost of goods continuing to climb, retailers are heading into one of the toughest Christmas shopping seasons to come. they have struggled with for years.Consumer confidence remains weak and retailers must strike a very delicate balance between protecting their own margins and further eroding confidence by passing on price increases. laser focus on their own costs and efficiencies in order to remain price competitive this festive season.As consumers focus on getting value for money by switching to own brand items and chasing discounts, the right pricing and promotional activities could mean the difference between a successful or dismal Christmas for retailers this year.

Commenting on food and beverage, IGD CEO Susan Barratt said: “September food and beverage sales fell from August as the weather cooled and life returned to normal after vacations. However, there was an uptick in sales in the week following Queen Elizabeth II’s death as the nation gathered to mourn her passing, momentarily distracted by stiffening economic headwinds.

“Nevertheless, the month was dominated by rising prices, particularly for food and energy, but the energy price guarantee announced by the government contributed to a slight increase in our buyer confidence index. However, without much good news and buyers facing a tough winter, there are still many challenges ahead.”

Elsewhere, Tesco is continuing its share buyback program, announced in April 2022, tasking HSBC to buy back £100m under its existing £750m scheme.

The purpose of these share purchases is to reduce the company’s share capital, Tesco said.

Pub group Marston’s has recovered sales to near pre-Covid levels despite wider macro concerns.

Total like-for-like sales for the 52-week period declined 1% in 2019, with the slight decline reflecting the impact of trade restrictions in December and January as a result of Omicron and the corresponding impact on consumer sentiment in the first semester.

Total retail sales for the Group’s managed and franchised pubs increased 2% as beverage sales continued to outperform food sales.

Like-for-like sales are “encouraging” and continue to improve over the 10 weeks from July 24 to October 1; i.e. 3% more than in 2019 and 4% more than last year.

Growth continues to be driven primarily by beverage sales, the group said, with food sales weaker mainly due to warm weather.

“The level of customer demand remains encouraging, despite the continued uncertainty around the cost of living. We remain confident that our advertising strategy is starting to generate positive momentum, as evidenced by this strong commercial performance.”

“Our strategy is centered on delivering affordable pub experiences for our customers in a quality environment inside and out. Looking ahead, the combination of our strategy and the primarily community-based location of our pubs means we are well positioned to weather the challenging consumer environment.

In the markets this morning, the FTSE 100 opened down 0.9% to 6,896.8 pts.

Early birds include Marston’s, up 3.3% to 37.1p, Devro, up 6% to 176.8p and McBride, up 6.8% to 26.7p.

Fallers include Virgin Wines, down 4% to 48p, Bakkavor, down 3.8% to 93.4p and Kerry Group, down 3.5% to 89.4p.

yesterday in town

The FTSE 100 closed down 0.5% yesterday at 6,959.3 points.

Fallers included THG, down 9.7% to 32.3p, AG Barr, down 4.2% to 448p, Premier Foods, down 4.1% to 92.8p, Cranswick, down 3.8% to 2,626p, Just Eat Takeaway.com, down 3.5% to 1,208.8p, Greencore, down 3.4% to 69.3p and Deliveroo, down 3.1 % at 79.5p.

The day’s risers included DS Smith, up 12.1% to 271.1p, FeverTree, up 4% to 875.5p, Kerry Group, up 3.2% to 92.7p, Marks & Spencer , up 2.8% to 96.5p, Coca-Cola HBC, up 2.8% to 1,959p, Tesco, up 2.7% to 206.1p and B&M European Value Retail, up 2.6% at 315p.

Sallie R. Loera