Convenience food manufacturer Greencore (LON:GNC) gained ground after serving up a tasty FY26 profit guidance upgrade.
The world’s biggest sandwich maker hailed a ‘strong operational and financial performance’ in Q3 with volume growth ahead of the market.
The upgrade demonstrated that Greencore is seeing the benefits of its convenience food mega-merger with rival Bakkavor.
Encouragingly, Q4 trading has ‘started positively’, with strong volume momentum continuing from the latter half of Q3.
Portfolio nourishment
Greencore now expects FY26 adjusted operating profit for the continuing UK business to be above current market expectations and in the £234 million to £242 million range. Before today’s update, consensus called for profits of between £219 million to £231 million.
The upgrade was driven by a tasty performance in the 13 weeks to 26 June from enlarged Greencore. The Dublin-based firm delivered volume growth ahead of the market as well as ‘excellent’ underlying profit momentum.
Crucially, Greencore has made a ‘fast start on synergy delivery’ following its £1.2 billion acquisition of rival convenience food maker Bakkavor.
Total sales fattened up 3.2% in Q3, with volume growth accelerating versus H1 and price increases helping Greencore to offset higher wage costs.
During Q3, the FTSE 250 constituent saw particularly strong demand for its quiche, bread, sushi and chilled dips.
Growth through innovation
CEO Dalton Philips, Greencore CEO, said: ‘We continue to deliver for our customers, supporting them through the busy summer period and helping them drive growth through product innovation.
‘Greencore has never been stronger, and I’m really encouraged by what the enlarged business is starting to achieve. Customers want to grow their business with us, our integration is fully on track, and we have made a fast start on synergy delivery.’
While Greencore faces headwinds from elevated raw material and labour costs, the company is keeping a lid on costs and focusing on margin improvements.
We think product innovation will continue to drive growth for Greencore. During Q3 alone, the company launched 375 new products. These included stuffed pizza crust ranges, doughball sharing buckets and a Japanese-inspired chocolate, strawberry and pistachio creme sandwich.
Greencore is also making good progress in digesting the Bakkavor deal. Increased scale is helping Greencore to win new contracts. And the enlarged company has opportunities to cross-sell a wider range of foods to a broader customer base.
There is also a future upside catalyst in the form of a potential sale of the US business. The US arm has been treated as a discontinued operation and held for sale asset. Greencore says an update will be provided ‘in due course’. Watch this space.
Read the press release here: https://www.greencore.com/investor-relations/
