Greencore boss Dalton Philips faces pushback at AGM as small shareholders call for dividends

Individual shareholders attending convenience food maker Greencore’s annual general meeting (AGM) pushed for dividends on Thursday as the group struggles to recover earnings in a volatile market.

Chief executive Dalton Philips – four months into the job after almost five years at the DAA – said the Greencore board has to strike a “balance” in how to return profits to shareholders at the AGM.

The call for dividend payments came after Greencore announced two buybacks last year, the most recent of which – a £15m buyback, part of a £50m total return to shareholders – began in November.

“When you’ve got stability of earnings, you can make these decisions,” he told reporters after the AGM. “At the moment, the earnings have been very volatile.”

The UK-listed firm’s share price has tumbled by more than half in a year, a fact that irked some shareholders who attended the meeting in Dublin’s Aviva Stadium.

The Greencore board – which is also in flux with the retirement of Gary Kennedy and recent appointment of chairman Leslie Van de Walle – has put off a decision on dividends until at least May 30, when it is due to release its half-year earnings. But it is ruling nothing out.

The blowback from shareholders came after a trading update revealed lower-than-expected volumes in some of Greencore’s key categories, which the group said were down to the economic slowdown, UK strike action and higher costs that it has found difficult to pass on to large retailers.

While first-quarter revenue was up 19pc year-on-year to £463m (€525m), and pro forma revenue was up 18.9pc, volumes in Greencore’s most lucrative ‘food to go’ business were slightly behind the first quarter of last year.

Greencore’s adjusted operating margin for the full year last year was 4.2pc, up on the previous year but small compared with its peers.

Mr Philips said he expects growth this year to come from sandwiches, new customers and “removing costs”. He said that the group is not “yet” looking at cutting jobs.

“We’re not at that stage yet. But I want to look at the whole cost base, and our assets. Are we getting the best out of them? You look at down times, can we put third shifts on, are we working seven days? All of those sorts of things unlock costs.”

Negotiations with supermarket giants on costs are also getting tougher, Mr Philips said.

“There is huge resistance to take price at the moment, and that means that in some cases the relationships can get quite strained,” he said.

“We’re saying, ‘we have to pass through these costs’. I mean, you’ve seen our margins. And the retailers are saying, ‘We’re not going to.’ And that can lead to robust conversations.” Brexit is also denting sales in Ireland due to more onerous customs rules.

“We’d love to be selling our sandwiches in the Republic,” Mr Philips said.

“We can’t at the moment because of the complexities of getting it in because of the shelf life. Anything that would alleviate that would clearly open up a bigger market for us.”

Despite issues raised from the floor, all votes at the AGM were carried by large shareholder majorities.

So how does a job in sushi, sandwiches and ready meals compare to life at the DAA?

“As a CEO, you always face challenges. It’s rarely calm. It’s very volatile, the food sector in the UK. Certainly, the emotion of people missing flights is very visceral, and very real. They are both challenges.”