Greencore reports ‘strong' H1 results as deal agreed for Bakkavor
Convenience food manufacturer, Greencore has reported a 50% increase in group operating profit to £38.1 million in the six months to March 28.
The group has also today (Thursday, May 15) confirmed the terms for a recommended acquisition of food maker Bakkavor have been agreed in a deal worth around £1.2 billion.
Greencore, which has its headquarters in Dublin, said that half year (H1) revenue increased by 6.5% to £922 million.
This was driven by net new business wins impact of 2.9%, underlying volume and mix of 1% and the positive impact of inflation recovery and price of 2.6%.
Profit before tax was £26.7 million in H1 25, up 81.6% compared to £14.7 million in the same period a year previously.
Greencore
Revenue in 'Food to Go' categories totalled £611.4 million and accounted for approximately 66% of reported revenue. This represented an increase of 5.6% in 'Food to Go' revenue compared to H1 24.
The group's 'Other Convenience' categories comprise activities in the chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings.
Reported revenue across these categories increased by 8.1% to £310.6 million in H1 25.
Greencore said there was a continued focus on product innovation in the period, with 270 new products launched.
Dalton Philips, Greencore chief executive
Commenting on the financial results, Dalton Philips, Greencore chief executive officer, said that the company made excellent progress in the first half of the financial year.
'By continuing to strengthen our core business, we've accelerated our financial performance – enhancing returns, improving margins and driving growth ahead of the market. We have built strong momentum and remain committed to continued delivery.
'Our strong first half performance was enabled by continued growth with customers, innovative new products and disciplined cost management, including through operational excellence and automation,' he said.
'While we are mindful of a challenging market environment, and with our seasonally stronger second half still ahead of us, we now expect adjusted operating profit for FY25 to be ahead of previous guidance, in the range of £114-117 million,' Philips added.
Bakkavor
Greencore said that the deal with Bakkavor would create a leading UK convenience food business with a combined revenue of around £4 billion and having approximately 30,500 employees.
The boards of Greencore and Bakkavor believe that a combination will 'drive significant benefits for customers and colleagues of both companies and will make a significant continuing contribution to the UK economy'.
Dalton Philips said that 'the combination of Greencore and Bakkavor is an unrivalled opportunity to create a true UK national food champion with an even greater breadth of category range and deeper customer relationships'.
'We are bringing together two experienced teams and our complementary portfolios will drive benefits for customers and consumers across the UK.
'The combined group will be able to invest more in innovation and product development ensuring we can provide the consumer with greater food choices at more points in the day, bringing together Greencore's 'food for now' expertise with Bakkavor's 'food for later' portfolio,' the Greencore chief executive added.
Mike Edwards, chief executive officer of Bakkavor, said that 'combining with Greencore would bring together two businesses with the best people in the industry allowing us to take a 'best of both approach' to drive performance on every level'.
'The combined business will create more opportunities for colleagues, allow us to do an even better job for customers, and be even more resilient.
'I am confident that the relentless focus that both businesses have on quality, service and innovation, and on striving to be a great place to work, will remain at the heart of the bigger business,' he said.
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Mr Philips and Greencore chief financial officer Catherine Gubbins also said that additional synergies beyond the £80m that the group believes could be extracted from its acquisition of Bakkavor are possible. Greencore confirmed on Thursday that the terms of the planned takeover of Bakkavor have now been formally agreed by the boards of the two companies. Irrevocable undertakings representing just over 69pc of shares in Bakkavor have now been received by Greencore in respect of the deal. About 75pc of shares must be voted in favour to push it over the line, which is now a virtual certainty. Mr Philips said Greencore, known in a previous incarnation as Irish Sugar, will celebrate 100 years in business next year. Greencore currently generates virtually all its revenue in the UK, and the combined group including Bakkavor will have annual sales of about £4bn, almost all of it also delivered in the UK. 'We're an Irish business,' said Mr Philips. 'We're an ambitious business. In time, we may look elsewhere for growth opportunities. Being headquartered in Ireland gives you that platform for future growth in other jurisdictions. I don't see any reason why we would want to change where we are currently headquartered.' Ms Gubbins said having the group headquarters in Ireland would ease the path for future expansion. She said it is 'absolutely' the case that having the company based in Ireland would make it easier to expand within the European Union, for instance, given that the UK is no longer a member of the trading bloc. Greencore is targeting half of the projected synergies from the deal being achieved in the first year, 85pc by the second and all by the third year. 'In terms of synergies, we're looking at at least £80m,' said Mr Philips. 'We're very confident that we can do that. This is a combined business with a £4bn sales base. The first step is to deliver the £80m and then probably re-group and see is there more opportunities. We haven't put any revenue synergies into our models, so this is cost-driven, but there will in time be lots of other opportunities to go after.' ADVERTISEMENT The bulk of the initial cost savings – about 45pc – are expected to be achieved through the elimination of duplicate organisational functions, such as head office and other senior management roles. The combined group will have about 30,500 employees, mostly spread across about 35 production sites in the UK. Mr Philips pointed out that Greencore already has a high annual attrition rate of staff, at 20pc, with people constantly moving in and out of the business. Greencore and Bakkavor both include major retailers such as Tesco, Sainsbury, Marks & Spencer and Asda among their customers, but providing different food products. Greencore generates two-thirds of its revenue from food-to-go products such as sandwiches, sushi and salads, while Bakkavor also makes desserts, pizzas and bread, for instance. Greencore also reported a strong set of first-half results on Thursday, with its pre-tax profit jumping 82pc to £26.7m.
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Convenience food manufacturer, Greencore has reported a 50% increase in group operating profit to £38.1 million in the six months to March 28. The group has also today (Thursday, May 15) confirmed the terms for a recommended acquisition of food maker Bakkavor have been agreed in a deal worth around £1.2 billion. Greencore, which has its headquarters in Dublin, said that half year (H1) revenue increased by 6.5% to £922 million. This was driven by net new business wins impact of 2.9%, underlying volume and mix of 1% and the positive impact of inflation recovery and price of 2.6%. Profit before tax was £26.7 million in H1 25, up 81.6% compared to £14.7 million in the same period a year previously. Greencore Revenue in 'Food to Go' categories totalled £611.4 million and accounted for approximately 66% of reported revenue. This represented an increase of 5.6% in 'Food to Go' revenue compared to H1 24. The group's 'Other Convenience' categories comprise activities in the chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings. Reported revenue across these categories increased by 8.1% to £310.6 million in H1 25. Greencore said there was a continued focus on product innovation in the period, with 270 new products launched. Dalton Philips, Greencore chief executive Commenting on the financial results, Dalton Philips, Greencore chief executive officer, said that the company made excellent progress in the first half of the financial year. 'By continuing to strengthen our core business, we've accelerated our financial performance – enhancing returns, improving margins and driving growth ahead of the market. We have built strong momentum and remain committed to continued delivery. 'Our strong first half performance was enabled by continued growth with customers, innovative new products and disciplined cost management, including through operational excellence and automation,' he said. 'While we are mindful of a challenging market environment, and with our seasonally stronger second half still ahead of us, we now expect adjusted operating profit for FY25 to be ahead of previous guidance, in the range of £114-117 million,' Philips added. Bakkavor Greencore said that the deal with Bakkavor would create a leading UK convenience food business with a combined revenue of around £4 billion and having approximately 30,500 employees. The boards of Greencore and Bakkavor believe that a combination will 'drive significant benefits for customers and colleagues of both companies and will make a significant continuing contribution to the UK economy'. Dalton Philips said that 'the combination of Greencore and Bakkavor is an unrivalled opportunity to create a true UK national food champion with an even greater breadth of category range and deeper customer relationships'. 'We are bringing together two experienced teams and our complementary portfolios will drive benefits for customers and consumers across the UK. 'The combined group will be able to invest more in innovation and product development ensuring we can provide the consumer with greater food choices at more points in the day, bringing together Greencore's 'food for now' expertise with Bakkavor's 'food for later' portfolio,' the Greencore chief executive added. Mike Edwards, chief executive officer of Bakkavor, said that 'combining with Greencore would bring together two businesses with the best people in the industry allowing us to take a 'best of both approach' to drive performance on every level'. 'The combined business will create more opportunities for colleagues, allow us to do an even better job for customers, and be even more resilient. 'I am confident that the relentless focus that both businesses have on quality, service and innovation, and on striving to be a great place to work, will remain at the heart of the bigger business,' he said.
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