Greencore continues to surf the wave of the UK food-to-go boom as another big jump in sandwich sales underpinned its 5.2% sales rise to £1.34bn for the year to September 25 this week.
Its food to go division grew by 8.9%, “well ahead” of overall UK sandwich market growth of 4.1%. To cope with the rising volumes, Greencore had previously committed to a £30m investment in its Northampton sandwich plant, but this week pledged a further £12m to build another new facility. The food to go performance helped overall group operating profit rise by 10.6% to £91.7m, although prepared meals grew by a more modest 1.8% and grocery like-for-likes declined by 1%.
The shares dipped 2.4% to 312.6p on Tuesday as investors reacted to the news that the benefits from increased capacity in food to go would flow through more slowly than first anticipated as a result of the new £12m facility. However, the shares had recovered back to 323p by Thursday morning and Jefferies analyst Martin Deboo stuck to his 370p price target and predicted upgrades to its earnings forecasts.
He said: “FY15 is just ahead of our expectations and the tone is positive. A further contract win in UK food to go upgrades our numbers in FY17 & beyond… We see plenty of room for the shares to progress from here.”
Britvic saw its shares drop 0.4% on Thursday to 707p, despite announcing a 10.6% rise in full-year pre-tax profits to £147m on Wednesday. Revenues slipped by 0.6% to £1.3bn and it said it had seen a “slow start” to its new financial year. But it predicted further EBITDA growth next year to £180m-190m (from £171.6m this year) driven “disciplined cost management”.
Elsewhere, Ocado was boosted at the start of the week by an upgrade from broker UBS to “buy” from “neutral” with a price target of 480p. The upgrade was due to the market “overplaying fears on Amazon Fresh’s possible arrival and expectations cooling on a new [international] partner”. By Thursday Ocado was trading 2.2% higher that its closing price last week at 362.1p, having jumped 4.6% on Wednesday.