Greencore Group (LSE:GNC) has upgraded its full-year profit guidance for the second time this year, pointing to accelerating volume growth and strong cash generation in the fourth quarter.
The London-listed convenience food maker, which makes sandwiches, salads, ready meals and other chilled products for UK supermarkets and foodservice customers, now expects FY26 adjusted operating profit for continuing UK operations of approximately £248m, ahead of current market consensus of £238m and above the £234m-£242m range it set in July.
Pro forma revenue for the fourth quarter, the 13 weeks to 25 September, rose 4.5% to £1,036m, reflecting strong volume growth and recovery of labour, packaging and raw material inflation; full-year pro forma revenue grew 3.6% to £3,378m.
Manufactured pro forma volume growth accelerated to 2.1% in the quarter, ahead of the wider grocery market's 0.5%, with both the legacy Greencore and Bakkavor businesses outperforming the market; chilled categories including salads, dips, quiche and sandwiches performed strongly.
That caps a year in which full-year manufactured volume grew 1.1%, also ahead of the 0.5% market rate, with innovation remaining a growth driver: 167 new products launched in the quarter, including Italian ready meal ranges, summer grab-and-go lines and limited-edition mac and cheese products.
"Greencore has had a monumental year, and we finished it with a strong performance in Q4," said chief executive Dalton Philips, adding that the group continues "to make strides in our integration with Bakkavor".
Synergy delivery from the Bakkavor acquisition, which completed in January, has progressed strongly, the group said, with a fast start on central reorganisation, procurement and distribution synergies; management had previously targeted at least £80m of annual cost synergies within three years, against roughly £15m expected in-year for FY26.
Net debt, excluding lease liabilities, is expected to be approximately £600m at year-end, equivalent to roughly 1.8 times adjusted EBITDA, against a medium-term target of 1 to 1.5 times, with Greencore crediting profit momentum and strong cash management.
That marks a shift from earlier in the year, when integration and acquisition costs had driven negative free cash flow; the group said in July that cashflow generation had already turned positive in the quarter.
Looking to the new financial year, Greencore said first-quarter trading has started positively with volume momentum carrying over from the fourth quarter, and flagged further cross-selling wins worth approximately £30m of annualised revenue, or 75 basis points of growth, across salads, ready meals, dips and breads, due to launch across the second and third quarters of FY27.
The group's US business, held as a discontinued operation amid an ongoing sale process, continues to trade positively and in line with expectations.
Greencore will publish full-year results on 1 December, when it plans to provide further detail on integration progress and a capital allocation framework for the enlarged group.