Shares in Greencore, a leading UK convenience food producer, have surged by six per cent following Wednesday’s trading update which underscored another robust quarter and a solid full-year performance.
The FTSE 250-listed group, known for supplying sandwiches, rolls and wraps – including the viral Japanese sando-inspired strawberry and cream sandwich – to Marks & Spencer, reported an annual revenue of approximately £1.95bn and raised its adjusted operating profit guidance to £125m, surpassing previous estimates, as reported by City AM.
These positive results emerge amidst increased pressure on M&S due to a cyber attack that has disrupted online orders and resulted in some stores facing stock shortages.
In response, Greencore has increased deliveries to its largest retail customer, introduced additional shifts at its Northampton factory, and dispatched more lorries to stores than during the Christmas period, as stated by Chief Executive Dalton Philips.
A prosperous year for convenience foods
Greencore highlighted that its fourth quarter maintained the momentum of the year, with manufactured volumes rising roughly three per cent and underlying volumes (excluding new business wins) growing by one per cent.
Product innovation also played a significant role, with 130 new launches in the quarter, ranging from premium cooking sauces to elevated mac and cheese and hot and cold food-to-go items for new store formats.
“Our focus in the new financial year remains on producing high-quality, fresh food for consumers across the UK”, Philips said.
“We look forward to completing the Bakkavor transaction, subject to regulatory approval, and remain excited about the potential of combining two great UK food businesses”.
Profit conversion surpassed forecasts, driven by robust volume growth and cost management measures, including waste reduction and labour efficiency improvements.
Net debt is anticipated to drop to £70m, down from £148m in the prior year, with net debt to EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) comfortably beneath Greencore’s medium-term target range.
Addressing M&S cyber crisis
The M&S cyber incident, linked to the hacker collective Scattered Spider, triggered weeks of disruption, with online ordering for clothing and homewares suspended and staff unable to access clocking systems.
In response, Greencore switched to pen-and-paper ordering processes at its M&S-dedicated facilities, whilst deploying additional staff to key London stores to maintain supply.
“They’re a massive customer for us and we’re trying to flood them with products to help them”, Philips said at the time.
“There are times when you do need to revert to manual systems in any business… but look, it works well.”
M&S shares have struggled to recover fully from the incident, trading at 337p in early July, down from a peak of 411p before the breach was disclosed in April.
The retailer estimates the cyber fallout will cost £300m, although insurance and cost efficiencies are anticipated to offset some losses.
Greencore’s future outlook
Greencore has also emphasised its ongoing acquisition of Bakkavor Group, which has received shareholder approval and is currently under scrutiny by the Competition and Markets Authority.
The merger is set to establish one of the UK’s largest food-to-go suppliers, with potential synergies in product offerings and distribution.
For investors, this update indicates that Greencore’s commitment to operational excellence, product innovation, and customer service – particularly during periods of retail disruption – has bolstered confidence in the group.
The combination of robust underlying growth, cash generation, and resilience in the face of external shocks has fuelled the recent surge in shares and positioned the company as a key supplier in the UK convenience food market.
