Convenience food group Greencore this morning (21 May) booked an increase in first-half earnings but warned about “tough” UK market conditions for the remainder of the year. Analysts offered an overall positive view of the results, despite the cautious outlook by the group.
Investec analyst Nicola Mallard
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“Greencore has delivered a solid set of results in a challenging climate and against some tough comparatives. UK grocery growth has slowed and horsemeat has impacted ready meal consumption, but we hold our forecasts for the full year, with the US stepping into the role of main profit growth generator. US acquisitions are integrated and the Starbucks business up and running. We remain buyers of the company with our TP (EBITDA based) of 130p.”
Panmure Gordon analyst Damian McNeela
“Greencore’s interim results are modestly ahead at the operating profit line, rising by 6.3% to GBP33.7m, aided by improved cake and desserts and ingredients profitability and comfortably ahead at the adjusted EPS level, rising by 10.9% to 6.1p benefitting from lower interest costs. The UK market in general remains challenging but we continue to see FY 2013 adjusted profit before tax growth of 10% driven by continued improvement in cakes and desserts as well as further expansion in the US. We reiterate our ‘buy’ recommendation and 125p price target.
Shore Capital analyst Darren Shirley
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By GlobalData“Greencore has reported interim results for the half year ended 29 March a little ahead of expectations. As such, we do not anticipate changing FY 2012/13 forecasts despite the beat to H1 expectations, currently forecasting CPTP of GBP59.5m, EPS 13.6p, FY dividend of 4.46p. Trading on a September 2013 PER of 8.7x and an EV/EBITDA of 7.0x with a dividend yield of 3.8%, we reiterate our ‘hold’ recommendation needing to see a pick in UK trading momentum before we can take a more positive stance.”
Davy Research
“Greencore has delivered a solid in-line set of numbers for the six months ending 29 March 2013. Delivering earnings growth in the context of the H1 headwinds impresses. A healthier performance from cakes and the US helped offset the challenges faced in ready meals. The outlook statement calls for progress in adjusted EPS on a full-year basis which is in line with our 8% adjusted EPS growth (to 13.8p).”
