Greencore, the UK convenience food manufacturer, which is headed by Patrick Coveney reported a 0.9% rise in adjusted operating profits to £105.5m for the full year ended 27 September. Overall revenues fell 3.5% to £1.45bn. This mainly reflected the impact of site disposals and product category exits. When these are stripped out, revenues were up 2.6%.

The company blamed a subdued UK trading environment, especially in the second half of the year, for the weaker set of results. It also warned of cautious consumer demand particularly in the context of uncertainty around Brexit. Operating margins expanded from 7% last year to 7.3%. The group proposed an increase of 11.3% in the total dividend to 6.2p.

Greencore says it continues to believe that the risks from Brexit are manageable in the medium-term

Divisions

Greencore splits its business into two main divisions: food to go and convenience.

In its food to go categories, the Group generated an improved performance in the period, driven by volume growth and a strong operational performance.

Food to go which is made up of sandwiches, salads, sushi and chilled snacking, is the group’s largest division and accounts for two thirds of total revenue. This division reported revenue growth of 3.6% to £962.5m for the year. However the second half of the year showed only 0.3% growth when the September acquisition of Freshtime is stripped out. The company says that this growth outstripped the market during the year and that the market growth is lower than usual due to the challenging market conditions and weather.

In the Group’s convenience categories, an improvement in the ready meals business in the second half following the closure of sites and exiting product lines helped offset mixed performance in its cooking sauce business.

This division, which is made up of chilled ready meals, soups, sauces, quiche, and Yorkshire puddings as well as an ingredients trading business in Ireland reported a 15% decline in revenues to £483.6m. When sites that were either disposed of or have ceased trading are taken out revenues declined 1.2%.

Brexit risks

Greencore says it continues to believe that the risks from Brexit are manageable in the medium-term, while acknowledging potential near-term challenges associated with a disorderly exit.

Twelve months ago, Greencore completed the disposal of its US business to Hearthside Foods and reported a profit on disposal of £55.9m. However, it also took an exceptional charge of £25.4m relating to reshaping its debt and exiting the US market. Net debt decreased to £288.5m from £501.1m at the end of financial year 2018.