Convenience food manufacturer Greencore has reported a big jump in profits for the six months to March 29 and said it was now guiding full year adjusted operating profit in the range of £86-88m - ahead of market expectations.
Its shares jumped as much as 11.6% in London trade to reach 155.6 pence - the highest level since May 2021.
Greencore said its adjusted profit before tax for the six months jumped by 397% to £16.9m from £3.4m the same time last year.
Its half year revenues slowed by 6.4% to reach £866.1m from £925.8m after it decided to exit a number of low margin contracts and it sold off the Trilby Trading business.
The Dublin headquartered company, which is the biggest pre-packed sandwich maker in the UK, said it now expects full year adjusted operating profit in a range of £86-88m, ahead of current market expectations.
Greencore also announced its target to return a further £50m to shareholders over next year and said it will start with a share buyback of up to £30m.
If the business continues to trade as expected it intends to declare a dividend for the year to September 2024, it added.
The company also said today that a new large ready meals contract win will be started at its Kiveton site during the latter part of its fourth quarter.
Greencore noted that with the exception of labour costs, inflation in its main cost components has slowed and the majority incurred was recovered or mitigated in the six month period.
It added that efficiency initiatives also supported the offsetting, recovery and mitigation of labour, fixed cost and other overhead cost inflation.
Labour costs will continue to increase with the introduction of further national living wage increases in the UK from April 2024, it added.
Dalton Philips, Greencore's chief executive, said the company delivered excellent progress against its strategic priorities in the first half and continued to outperform the market in a difficult consumer spending environment.
"The group's accelerating financial performance is very encouraging as we focus on driving profitability and returns. We are working with our major retail customers to develop new products and new offerings which are driving the growth of our Food to Go segment ahead of the market," Mr Philips said.
"We have exited low margin business and are undertaking a range of actions to increase the returns profile of each element of the portfolio. We have many opportunities to continue to grow our business profitability and have commenced investing in our IT infrastructure to create a solid platform for growth and enable further efficiency gains across the group," he added.
"Notwithstanding this additional investment, and while our seasonally stronger second half is still ahead of us, we now expect FY24 adjusted operating profit in a range of £86-88m, ahead of current market expectations," the CEO added.
Last year Greencore made 779 million sandwiches and other food to go products, 132 million chilled ready meals, 45 million chilled soups and sauces and 245 million jars of cooking sauces, pickles and condiments.
