Greencore shares soar to highest level since Covid on earnings upgrade

Greencore Group’s shares soared to their highest level since the outbreak of the Covid-19 in early trading on Tuesday as the marker of sandwiches and ready meals for Aldi to Marks and Spencer said its 2024 earnings estimates would beat analysts’ expectations for a third time.
The Dublin-based, but London-listed food group said its adjusted operating profit for its financial year to the end of September should come in between £95 million (€113.2 million) to £97 million, up from its previous forecast of €88 million-€90 million. It had previously raised projections in May and July.
Analysts suggested that Greencore may see its earnings rise towards its pre-pandemic peak of £105 million in its current financial year. The group’s chief executive, Dalton Phillips, has targeted reaching that level in 2026.
Shares in the largest sandwich maker in the UK rose as much as 9 per cent in early trading to £196.40.
“With consensus currently expecting fiscal year 2025 adjusted [operating profit] of £96.3 million and 12.4 pence adjusted earnings per share, we would expect a similar mid-single digit level of upgrades, approaching the pre-pandemic earnings peak of £105 million,” said Patrick Higgins, an analyst with Goodbody Stockbrokers.
Shares in Greencore have more than doubled in value so far this year as it continues to recover from series of hits over the past 4½ years, including the Covid-19 pandemic, supply-chain and labour issues, and inflation.
“The Greencore team delivered an outstanding performance with our fiscal year 2024 results now expected to exceed current market expectations,” said Mr Phillips, who took over from long-servicing CEO Patrick Coveney two years ago.
“As we enter the new financial year, our focus remains on making really great food, rebuilding our profitability, and positioning Greencore to be the UK’s leading convenience foods manufacturer.”
Mr Phillips plans to outline a new medium-term strategy at a so-called capital markets day in early 2025.
Greencore’s sales rose an annual 3.7 per cent on a like-for-like basis in the fourth quarter and expects to officially report full-year revenues of about £1.8 billion when it publishes its results in December.
The earnings upgrade comes as the group books £2.5 million of costs on its technology transformation programme in the second half of the year as an exceptional item, rather than an operating expense.
Net debt, excluding lease liabilities, amounted to about £148 million at the end of September, down from £154 million a year earlier.
Greencore’s net debt is expected to be at the lower end of the group’s medium term target range of 1-1½ times to earnings before interest, tax, depreciation and amortisation (Ebitda), it said.
The group extended its current share buyback programme by a further £10 million in August, bringing it to an aggregate value of up to £40 million.
Irish companies are on track to spend as much as a record €6.14 billion this year buying back their own shares.