Food-to-go boost helps Greencore post big sales
The sale of ready-to-go food at convenience stores in the UK helped to propel Greencore's total like-for-like revenues 7.5pc higher to £326.4m (€412.3m) in the third quarter of its financial year.
The company, whose chief executive is Patrick Coveney, said that total like-for-like revenue in its convenience unit climbed 10.1pc in the UK during the period.
"While the overall grocery market remained challenging, the food-to-go market was buoyant throughout the period, driven in part by growth in small store formats," the company said in a trading update.
It added that activity with several key customers during the quarter had helped Greencore to outperform the food-to-go market.
The company currently produces a total of 450 million food-to-go products a year in the UK and US.
Total revenue at the company's convenience food division rose 9.3pc to £310.5m (€392.1m) in the third quarter.
Greencore said that in the United States, its revenue during the third quarter was up 16.9pc on a constant currency basis.
"Following the planned exit of a set of non-core product lines during the period, like-for-like growth was 4pc (in the United States).
The company added that an extension of its facility in Jacksonville, Florida, has now been completed, with the first customer shipments delivered this month.
"Construction has commenced on the new facility in Rhode Island, with the project on track for commissioning in late spring 2015," it said. That project is costing about £20m (€25.2m). It will enable Greencore to supply New England markets and develop opportunities closer to New York.
In the US, Greencore delivers packaged food such as sandwiches, salads, sushi, and desserts to grocery stores and convenience chains.
Among its customers are Starbucks and 7-11.
Analyst Liam Igoe at Goodbody Stockbrokers described Greencore's third-quarter update as "strong". He estimates that the new extension to the Florida facility will add about $60m (€44.7m) in annual sales to Greencore's operation there.
That extension involved a £6m (€7.5m) spend by Greencore and enables it to manufacture frozen food-to-go there.
Mr Igoe pointed out that the food-to-go segment in the UK is benefiting from "robust growth" in the convenience store formats, where Greencore has a strong presence.
Greencore shares were trading at £2.70 yesterday afternoon in London, down 1.6pc.
During the quarter, Greencore also completed the sale of its food service desserts business, Ministry of Cake, for an upfront cash payment of £8m and deferred consideration of £3m.
It has also concluded an agreement to sell a tract of residential land in West Sussex, with net proceeds to £16.5m (€12.3m) expected from the sale this year.