Greencore Group – excellent results news and agreement for the Bakkavor acquisition – leading to its shares touching 201p in reaction

15.05.2025

This morning’s Interim Results announcement from the Greencore Group (LON:GNC) were excellent.

The company, which is one of the UK’s leading convenience foods manufacturers, showed that the half-year to 28th March saw a 6.5% improvement in its revenues at £922.0m (£866.1m), while its adjusted pre-tax profits were up 105.9% at £34.8m (£16.9m), generating a massive 117.9% increase in its earnings to 6.1p (2.8p) per share.

The Business

Greencore which is headquartered in Dublin supplies all of the major supermarkets in the UK, also supply convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers.

The group has strong market positions in a range of categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces, pickles and frozen Yorkshire Puddings.

Last year Greencore manufactured 748m sandwiches and other food to go products, 125m chilled ready meals, and 204m bottles of cooking sauces, dips and table sauces.

It carries out more than 10,500 direct to store deliveries each day.

The group has 16 world-class manufacturing sites and 17 distribution centres and transport hubs in the UK, with industry-leading technology and supply chain capabilities.

Management Comment And Outlook

CEO Dalton Philips stated that:

"The Greencore team again made excellent progress in the first half of the financial year, consistently delivering fresh, high quality convenience food to our customers and their shoppers.

By continuing to strengthen our core business, we've accelerated our financial performance - enhancing returns, improving margins and driving growth ahead of the market.

We have built strong momentum and remain committed to continued delivery.

Our strong first half performance was enabled by continued growth with customers, innovative new products and disciplined cost management, including through operational excellence and automation.

While we are mindful of a challenging market environment, and with our seasonally stronger second half still ahead of us, we now expect Adjusted Operating Profit for FY25 to be ahead of previous guidance, in the range of £114-117m."

The Bakkavor Bid Is Accepted

This morning it was announced that the two groups have agreed terms for Greencore to acquire the Bakkavor Group, which would create a leading UK convenience food business with a combined revenue of some £4bn and having approximately 30,500 employees.

Greencore shareholders will own 56% of the enlarged group, while the Bakkavor investors will have 44% of the equity.

Commenting on that announcement, Dalton Philips stated that:

"The combination of Greencore and Bakkavor is an unrivalled opportunity to create a true UK national food champion with an even greater breadth of category range and deeper customer relationships.

We are bringing together two experienced teams and our complementary portfolios will drive benefits for customers and consumers across the UK.

The combined group will be able to invest more in innovation and product development ensuring we can provide the consumer with greater food choices at more points in the day, bringing together Greencore's "food for now" expertise with Bakkavor's "food for later" portfolio.

Bakkavor is the ideal partner for Greencore and we look forward to delivering on the significant growth potential of the enlarged business."

In My View

On the face of it, the new amalgamation of these two food groups looks like a ‘no-brainer’ widening their product and service offer massively.

The group’s shares have been up to 201p in reaction to this morning’s news.

I believe that in due course this grouping will become a major sales and profit maker and that its shares will soon be trading back up in the 225p – 235p price range.