Greencore, a convenience-food manufacturer based in London, announced a decrease in revenue for the first fiscal quarter. The decline was primarily attributed to the disposal of its Trilby Trading business. However, the company expects its operating profit to align with market expectations.
For the 13-week period ending on December 29, Greencore's revenue fell by 4.7% compared to the same period the previous year, amounting to £441.3 million ($561.6 million). However, on a like-for-like basis, the revenue increased by 5.8%.
Contract Exits and Volume Decline
The company experienced a decline in total manufactured volumes, which decreased by 4.8%. This decrease was mainly due to the termination of several contracts that were yielding sub-optimal returns. One notable contract within their Chilled Ready Meals category significantly impacted this decline.
Operating Profit Outlook
Greencore anticipates that its adjusted operating profit for fiscal 2024, ending in September, will fall within the market expectations range of £80.5 million to £85.0 million. This projection excludes exceptional and other one-off items.
Cost Outlook and Wage Inflation
The company shared that inflationary pressures on raw materials and energy are subsiding, resulting in a more stable cost outlook for fiscal 2024 compared to the previous year. However, wage inflation due to National Living Wage increases will persist, requiring ongoing management through recovery and mitigating actions.
As of 08:29 GMT, Greencore's shares have risen by 0.7% to 103.6 pence.