Saturday 23 September 2017

Greencore to expand in US as flush customers buy more sandwiches

Greencore chief executive Patrick Coveney and chief financial officer Alan Williams at the AGM in Dublin. Picture: JASON CLARKE PHOTOGRAPHY
Greencore chief executive Patrick Coveney and chief financial officer Alan Williams at the AGM in Dublin. Picture: JASON CLARKE PHOTOGRAPHY
Sarah Stack

Sarah Stack

GREENCORE says it plans to expand its US operations after the company's American unit recorded 26.2pc growth in sales.

The food group wants to build new premises or make acquisitions there to bolster its multi-million-dollar deals with Starbucks and convenience store 7-Eleven.

The company is benefiting from rising consumer confidence in the UK, which is encouraging customers to splash out on take-away breakfasts and lunches.

"That's where the market is going well and we are growing more strongly than the market and that's giving us the revenue momentum," chief executive Patrick Coveney said.

Mr Coveney, who travels to Seattle next week to hold talks with the coffee shop chain, said his immediate plans were to grow business and distribution opportunities with both firms.

Greencore, the world's largest sandwich maker, produces 450 million ready-to-go foods every year.

Sales hit £320.5m (€388m) in the final quarter of last year with US revenues boosted by the Starbucks deal last year.

Mr Coveney admitted with just six production sites in the US, they were constrained by the distribution reach of fresh foods, which can travel a maximum 250 miles.

Greencore already serves 20pc of all Starbucks and 7-Eleven stores, but areas like Manhattan are out of reach.

"We think over the next three or four or five years, we will reach many more population centres than we can currently reach and that will be done through a combination of some new build activity and it is likely there will be some acquisition activity there as well," said Mr Coveney.

Earlier, during a low-key shareholder meeting near the Greencore offices in Santry, north Dublin, chairman Gary Kennedy told shareholders the US market was being earmarked for growth. "Potential in the USA is so strong we can not ignore any acquisitions that may arise," he added.

EXPECTATIONS

Greencore said late last year that it was on target to meet its revenue expectations.

The convenience foods division recorded sales of £305.6m, 6.9pc higher than in the prior year on a reported basis.

In the UK, like-for-like sales was 7.2pc higher than in the prior year.

Analyst Cathal Kenny, from Davy Stockbrokers, said while many peers were struggling for revenue growth in developed markets, Greencore was "stellar" when it comes to momentum.

"Greencore is guiding a performance in line with market expectations," he said.

"The group's financial position remains strong."

Irish Independent

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