Greencore (GNC) shrugged off the tough grocery market conditions to report a 3.2% revenue rise in the six months to 27 March.
The convenience food group’s total turnover climbed to £639.8m during the period, with like-for-like revenue growth in convenience foods of 4.9%.
Food-to-go was the standout performer for the business, rising 7% in the UK and 8.7% globally during the period after Greencore increased its capital investment in the segment in the US and UK.
During the first half it has commissioned an extension to its food-to-go facility in Northampton and will open a new factory next to the existing site in 2016.
The group also scaled up production at its Jacksonville facility in the US at the end of its last financial year, but admitted this had resulted in “some supply chain disruption” which has now been mostly resolved.
Greencore’s prepared meals business grew by 2.4% in the UK, which was ahead of overall market growth thanks to the performance of its Italian meals. Like-for-like revenue in its grocery business (excluding the Ministry of Cake foodservice desserts business which was sold in May 2014) declined by 1.2%
“The UK grocery retail environment remains difficult with profound changes taking place amongst our customers, together with net price deflation,” Greencore said. ”Our business has continued to trade well despite these challenges given its focus on convenience offerings which continue to exhibit volume growth.”
Operating profit of £40.1m increased by 7.8% versus the same period in 2014, driven by the rise in revenue, continued operational improvements and focus on cost control.
Chief executive Patrick Coveney added: “Our strategy of deepening our leadership, capability, capacity footprint and customer partnerships in the UK and US food to go markets continues to deliver growth.
“The group has stepped up its capital investment programme in new sites, which will provide a solid platform for growth in the months and years ahead. We carry good momentum into the second half and remain confident in our ability to deliver adjusted EPS growth for the year in line with market expectations.”
Analysts at Jefferies retained their “buy” recommendation, stating: “With the supply chain issues encountered in the US during H1 now largely rectified and the M&S contract ramp-up in the UK gathering pace, Group profitability should gain momentum in H2 as volume leverage kicks-in across both geographies.”
Greencore shares were up 1.7% to 354.6p in early trading this morning. The shares are up more than 19% so far this year.
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