Solid results expected from Greencore

Greencore will tomorrow report full-year results for 2013, with analysts predicting solid results despite a tough year for prepared meals.

While earnings per share growth of 8 per cent is expected, overall revenues are forecast to be down nearly 2 per cent year-on-year, due to sluggish demand for prepared meals. However, fine weather between July and September would have aided the Q4 revenue performance of Food-to-Go, which accounts for 40 per cent of divisional sales according to Davy Stockbrokers. According to the last interim management statement, Greencore revenues rose 2.6 per cent year-on-year to £305.8 million in Q3.

The company's US revenue momentum and customer alignment is likely to have improved over the year as Starbucks and 7-Eleven contracts gained scale, raising the confidence of analysts about the prospects for Greencore's US business, which will make a full-year earnings contribution in 2014. Davy forecasts a £54 million uplift in revenues for Convenience Foods in FY 2014. But one potential headwind to margin is the return of input inflation in the UK, with recent comments from Greencore's peers Bakkavor and 2 Sisters pointing towards input inflation headwinds.

"Our sense is that Greencore exited the year with good momentum in its US and UK Food-to-Go businesses. At this juncture, Greencore is very well placed to deliver another year of earnings growth and solid cash generation," Davy equity analyst Cathal Kenny said.