Greencore aims to increase full year profits by a fifth
CONVENIENCE foods company Greencore said yesterday that it expects to increase its full year profits by a fifth this year on the back of "robust" performance.
In a trading update, Greencore said that its trading through late summer and September was "fully in line with expectations" and that the group expected full year operating profits for 2010 to be about 20pc higher than 2009.
Sales are slated to be 8pc above last year. If those forecasts hold true then they would translate to an adjusted earnings per share (EPS) of 16.5c.
Last year the company recorded an operating profit of €72.9m on the back of €1.1bn worth of revenue. Looking ahead to 2011, the company said it expected a strong performance but admitted it was too early to tell given the current trading environment.
The update was broadly welcomed by the market but analysts pointed to a lack of detail behind the numbers.
"Greencore's share price has declined by about 14pc since it last updated the market in August. While there was no commentary on the US business, where growth rates have been halved in full year 2010, we understand that there is no change from the update given last August," said Killian Murphy of Goodbody stockbrokers.
Paul Meade of NCB said that based on this update, his target price for the stock of €1.45 was "undemanding".
"The update confirms that Greencore is currently trading well and the absence of any commentary on input price inflation pressures suggests its business is coping well in the current volatile input price environment," he said.
Key offsetting benefits include improved industry discipline on pricing due to the weakened financial state of most of its players, the lack of spare capacity across the sector and the exit from underperforming sectors. "Greencore is one of the leading performers in [the convenience foods] space and its improved financial position following the disposal of Malt and its continental convenience business in 2009 leaves it well positioned to grow its market share in the UK and US both organically and through small bolt on acquisitions" he added.
The stock rose nearly 2pc to reach €1.17 by late afternoon.