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(Sharecast News) - Convenience foods manufacturer Greencore upgraded its full-year profit guidance on Wednesday after it delivered "another strong quarter" in the three months ended 26 September, with both fourth-quarter and FY group revenues up 8%.
Greencore said revenue growth experienced throughout the year continued into Q4, driven by new business wins, new product innovation and favourable weather, with the group now expecting to report FY25 revenues of approximately 1.95bn.
Profit conversion during Q4 was also ahead of expectations, principally due to "strong volume momentum" and a focus on cost management through its "excellence initiatives", including reducing waste and ensuring effective use of labour at sites. Volume momentum continued into Q4, particularly in food-to-go categories such as sandwiches and sushi, with FY25 manufactured volume growing approximately 3% and underlying volume growing 1%, excluding new business wins.
As a result, Greencore now anticipates FY25 adjusted operating profits will be approximately 125m, above previous guidance of 118m-121m.
Greencore also said it continued to drive strong cash flow and strengthen its balance sheet during the period, with net debt, excluding lease liabilities, expected to be approximately 70m, down from 148m a year earlier, and a net debt to underlying earnings ratio "well below" its medium-term target range of 1.0x - 1.5x.
Chief executive Dalton Phillips said: "We had another excellent quarter in Q4, which rounded out an exceptional year. I am proud of the Greencore team for the passion and commitment they bring each day, allowing us to deliver for our customers. While there are wider economic headwinds, the strong performance means we are again upgrading our full-year guidance."
Greencore added that it was continuing to progress with its proposed acquisition of Bakkavor Group, after approval was received for the transaction from both Greencore and Bakkavor shareholders in July. As anticipated, the Competition and Markets Authority has launched its merger inquiry, with a Phase I decision expected by 27 October.
As of 0815 BST, Greencore shares were up 1.97% at 236.57p.
Reporting by Iain Gilbert at Sharecast.com