Last close As at 05/08/2026
GBP19.25
▲ −8.00 (−0.41%)
Market capitalisation
GBP1,977m
Research: Consumer
Greggs’ FY20 results were in line with expectations and highlight a year of two halves from a profit perspective. COVID-19 wrought the most damage in H120 before ‘better’ revenue and cost management restored the H220 operating margin back to normal levels (10.8%). Although current trading remains negative (-28.8% for the first 10 weeks of FY21), it is better than we and management expected and momentum is improving, leading us to increase our FY21 PBT forecast by c 5%. There is a very clear message that management is looking to the future by re-activating the store opening pipeline, accelerating multi-channel distribution and investing further in the supply chain, with more investment likely as management targets a presence in 3,000 locations, 44% more than today.
Greggs |
Looking forward |
FY20 results |
Retail |
17 March 2021 |
Share price performance
Business description
Next events
Analysts
Greggs is a research client of Edison Investment Research Limited |
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Greggs’ FY20 results were in line with expectations and highlight a year of two halves from a profit perspective. COVID-19 wrought the most damage in H120 before ‘better’ revenue and cost management restored the H220 operating margin back to normal levels (10.8%). Although current trading remains negative (-28.8% for the first 10 weeks of FY21), it is better than we and management expected and momentum is improving, leading us to increase our FY21 PBT forecast by c 5%. There is a very clear message that management is looking to the future by re-activating the store opening pipeline, accelerating multi-channel distribution and investing further in the supply chain, with more investment likely as management targets a presence in 3,000 locations, 44% more than today.
Year end |
Revenue (£m) |
PBT* |
EPS* |
DPS |
P/E |
Yield |
12/19 |
1,167.9 |
114.2 |
89.7 |
11.9 |
25.3 |
2.1 |
12/20** |
811.3 |
(12.9) |
(12.1) |
0.0 |
N/A |
N/A |
12/21e |
1,053.7 |
65.0 |
52.1 |
20.0 |
43.6 |
0.9 |
12/22e |
1,144.7 |
103.5 |
85.1 |
34.0 |
26.7 |
1.5 |
Note: *PBT and EPS are normalised, excluding amortisation of acquired intangibles, exceptional items and share-based payments. **53-week accounting period.
FY20: H2 operating profit despite tough environment
FY20 revenue declined by 30.5%, due to a 36.2% decline in like-for-like sales growth leading to a clean operating loss of £6.2m and loss before tax of £12.9m. Following the weak first half (see our note of 4 August 2020), and despite a further year-on-year revenue decline of c 18% in H220, Greggs reported an operating profit of £55.3m (10.8% margin) due to a combination of higher gross margin (+110bps y-o-y to 65.3%) and cost control (opex -14% y-o-y), helped by government financial support. Consistent operating cash generation during H220 and capex savings (both relative to sales) restored the balance sheet to a net cash position of £36.8m at the year-end.
FY21: PBT upgraded by c 5%
The more encouraging current trading statement leads us to increase our FY21 clean PBT estimate by c 5% to £65.0m. We assume gradual revenue recovery through FY21 such that during Q421 like-for-like revenue is back to 90% of FY19 levels. Our new FY22 revenue estimate includes c 9% revenue growth, with similar contributions from new space and like-for-like growth (versus 9% l-f-l growth in FY19), leading to c 59% growth in clean PBT of £103.5m. With improving trading and cash flow we assume a higher dividend than previously (20p/share versus 15p).
Valuation: Sales multiple recovered
The share price has performed strongly as a recovery in trading has been anticipated. On our new forecasts, with FY22e revenue marginally below that of FY19, the EV/sales multiple is 2.0x, marginally below the previous highest multiple (2.1x) achieved in FY19, pre-COVID-19. A faster rate of recovery than we model and continued progress with the strategic growth plan could lead to further upside.
Exhibit 1: Financial summary
£m |
2018 |
2019 |
2020 |
2021e |
2022e |
||
Year-end December |
IFRS |
IFRS |
IFRS |
IFRS |
IFRS |
||
PROFIT & LOSS |
|||||||
Revenue |
|
|
1,029.3 |
1,167.9 |
811.3 |
1,053.7 |
1,144.7 |
Cost of Sales |
(373.5) |
(412.2) |
(299.6) |
(384.2) |
(412.4) |
||
Gross Profit |
655.9 |
755.7 |
511.7 |
669.5 |
732.3 |
||
EBITDA |
|
|
145.7 |
231.9 |
115.4 |
186.0 |
226.3 |
Operating Profit (before amort. and except.) |
|
|
89.8 |
120.7 |
(6.2) |
71.7 |
110.2 |
Intangible Amortisation |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Exceptionals |
(7.2) |
(5.9) |
(0.8) |
0.0 |
0.0 |
||
Operating Profit |
82.6 |
114.8 |
(7.0) |
71.7 |
110.2 |
||
Net Interest |
(0.0) |
(6.5) |
(6.7) |
(6.7) |
(6.7) |
||
Profit Before Tax (norm) |
|
|
89.8 |
114.2 |
(12.9) |
65.0 |
103.5 |
Profit Before Tax (FRS 3) |
|
|
82.6 |
108.3 |
(13.7) |
65.0 |
103.5 |
Tax |
(18.2) |
(22.4) |
0.7 |
(12.3) |
(17.6) |
||
Profit After Tax (norm) |
71.6 |
91.8 |
(12.2) |
52.6 |
85.9 |
||
Profit After Tax (FRS 3) |
65.7 |
87.0 |
(13.0) |
52.6 |
85.9 |
||
Average Number of Shares Outstanding (m) |
100.7 |
100.8 |
101.0 |
101.0 |
101.0 |
||
EPS - normalised fully diluted (p) |
|
|
70.3 |
89.7 |
(12.1) |
52.1 |
85.1 |
EPS - (IFRS) (p) |
|
|
65.3 |
86.3 |
(12.9) |
52.1 |
85.1 |
Dividend per share (p) |
35.7 |
11.9 |
0.0 |
20.0 |
34.0 |
||
Gross Margin (%) |
63.7 |
64.7 |
63.1 |
63.5 |
64.0 |
||
EBITDA Margin (%) |
14.2 |
19.9 |
14.2 |
17.7 |
19.8 |
||
Operating Margin (before GW and except.) (%) |
8.7 |
10.3 |
(0.8) |
6.8 |
9.6 |
||
BALANCE SHEET |
|||||||
Fixed Assets |
|
|
347.5 |
646.5 |
631.0 |
641.6 |
670.4 |
Intangible Assets |
16.9 |
16.8 |
15.6 |
14.9 |
14.3 |
||
Tangible Assets |
330.5 |
353.7 |
345.3 |
356.6 |
386.0 |
||
Right-of-Use Assets |
0.0 |
272.7 |
270.1 |
270.1 |
270.1 |
||
Other |
0.2 |
3.3 |
0.0 |
0.0 |
0.0 |
||
Current Assets |
|
|
140.6 |
142.3 |
98.7 |
160.8 |
201.0 |
Stocks |
20.8 |
23.9 |
22.5 |
22.6 |
24.3 |
||
Debtors |
31.6 |
27.1 |
39.4 |
28.9 |
31.4 |
||
Cash |
88.2 |
91.3 |
36.8 |
109.3 |
145.4 |
||
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Current Liabilities |
|
|
(145.1) |
(208.7) |
(144.1) |
(179.3) |
(188.6) |
Creditors |
(136.4) |
(154.1) |
(91.1) |
(126.3) |
(135.6) |
||
Leases |
0.0 |
(48.8) |
(48.6) |
(48.6) |
(48.6) |
||
Short term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(8.7) |
(5.8) |
(4.4) |
(4.4) |
(4.4) |
||
Long Term Liabilities |
|
|
(13.8) |
(233.3) |
(264.0) |
(261.7) |
(261.7) |
Long term borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Leases |
0.0 |
(226.9) |
(243.1) |
(243.1) |
(243.1) |
||
Other long term liabilities |
(13.8) |
(6.4) |
(20.9) |
(18.6) |
(18.6) |
||
Net Assets |
|
|
329.2 |
346.8 |
321.6 |
361.3 |
421.1 |
CASH FLOW |
|||||||
Operating Cash Flow |
|
|
152.2 |
246.0 |
61.6 |
232.6 |
235.4 |
Net Interest |
0.2 |
(6.3) |
(5.9) |
(6.3) |
(6.2) |
||
Tax |
(16.1) |
(20.3) |
(10.7) |
(12.3) |
(17.6) |
||
Capex |
(64.9) |
(87.7) |
(59.8) |
(73.0) |
(93.0) |
||
Acquisitions/disposals |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Equity financing |
5.3 |
4.9 |
3.7 |
3.7 |
3.7 |
||
Dividends |
(33.1) |
(72.1) |
0.0 |
(20.2) |
(34.4) |
||
Borrowings |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Other |
(9.9) |
(61.4) |
(43.4) |
(51.9) |
(51.9) |
||
Net Cash Flow |
33.7 |
3.1 |
(54.5) |
72.5 |
36.1 |
||
Opening cash |
|
|
(54.5) |
(20.8) |
(17.7) |
(72.2) |
0.3 |
Other |
0.0 |
0.0 |
0.0 |
0.0 |
0.0 |
||
Closing cash |
|
|
(20.8) |
(17.7) |
(72.2) |
0.3 |
36.4 |
Closing net debt/(cash) |
|
|
(88.2) |
(91.3) |
(36.8) |
(109.3) |
(145.4) |
Closing net debt/(cash) including leases |
|
|
(88.2) |
184.4 |
254.9 |
182.4 |
146.3 |
Source: Greggs accounts, Edison Investment Research
|
|
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