Wednesday 26 October 2016

Greencore on track despite UK challenge

Published 29/07/2015 | 02:30

Patrick Coveney, Group CEO, Greencore Group
Patrick Coveney, Group CEO, Greencore Group

Irish convenience food group Greencore has warned that the UK grocery retail market "remains challenging" but said it is still on track to deliver full-year profits in line with market expectations.

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The company - which makes food products from sandwiches to own label ready meals for major retailers - said its revenue rose 6.2pc in the 13 weeks to June 26 to £346.5m (€489.2m)

In the nine months to June 26, revenue rose 4.7pc on a like-for-like basis to £986.3m (€1.39bn).

It added that in the UK, a combination of modest deflation in ingredient and packaging costs, coupled with "price investment" by grocery retailers, has resulted in value growth lagging volume in a number of Greencore's product markets during the latest period.

The company, which is headed by chief executive Patrick Coveney, said that its convenience food division saw sales rise 6.3pc to £332m (€468.7m) on a like-for-like basis in the 13-week period.

In the UK, like-for-like revenue in that division was up 4pc.

"The food-to-go business continued to experience good growth, led principally by the addition of new product lines in the Northampton facility," according to Greencore. "Elsewhere in the UK, revenue performance was more subdued."

Every year, Greencore makes more than 600m sandwiches, 150m ready meals and 40m quiches.

Greencore's shares, which are listed in the UK, slipped over 1pc during trading yesterday. They've risen about 17pc over the past year.

Greencore, whose clients include giants such as Starbucks, has been heavily investing in US facilities to expand its footprint there. It entered the market in 2008.

It said that like-for-like revenue there rose 22.1pc during the latest period. The rise was largely driven by the roll-out of new lines with its principal customers.

Seattle-based Starbucks is one of its major clients there. Late last year, Greencore said it was undertaking detailed planning for a new facility to be built in Washington State to supply a key customer. That facility is due to be completed next spring.

Greencore has also invested heavily in capital projects on the east coast of the US.

It has seven sites operating there already, in states including Massachusetts, Virginia, Utah, Illinois and Florida.

Apart from Starbucks, Greencore also counts convenience store retail chain 7-Eleven among its major clients in the United States.

Irish Independent

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