Wednesday 22 November 2017

Greencore shares surge as investors digest surge in profits

Patrick Coveney, CEO of Greencore
Patrick Coveney, CEO of Greencore
Ellie Donnelly

Ellie Donnelly

Greencore, the world’s largest sandwich-maker, has reported revenue of £1.0bn (€1.16bn) for the first six months of 2017, according to its interim results.

Revenue is up 46.1pc year-on-year at the company who’s CEO, Patrick Coveney, is brother of the Fine Gael leadership contender, Simon.

The company, which employs 16,000 people across 30 countries, reported group operating profit of £55.3m, a 27.1pc increase year-on-year, while earnings before interest, taxation, depreciation, and amortization was £79.1m, an increase of 31.2pc.

Commenting on the results, CEO Patrick Coveney said that it had been a “transformational period” for the company.

Shares in the company have risen as much as 8.75pc in heavy trading on the back of the results. Shares in London 247.20 pence each by late morning, as the market responded positively to this morning’s financial update.

Under the new reporting structure, the Convenience Foods UK & Ireland segment reported revenue of £685.7m, an increase of 16.1pc from the same period last year, with revenues in its food-to-go segment increasing almost 20pc.

Operating profit in this segment was £46.8m, while the operating margin for the sector was 6.8pc.

Meanwhile, its US Convenience Foods segment experienced incredible year-on-year growth of over 220pc, generating revenue of £324.6m.

Read more: How Simon Coveney's big brother dodged politics to manage the world's largest sandwich-maker

Despite the large revenue, operating profit for the segment was just £8.5m, with operating margins of just 2.6pc, highlighting the tight margins in the sector.

“In the UK, we have delivered significant expansion and investment following recent new long-term business wins, as our Food to Go business continues to grow rapidly. In the US, the addition of Peacock Foods has transformed our market and channel position and has given us a growth platform of real scale,” Coveney said.

At the end of March 2017, net debt stood at £556.6m compared to £331.8m at year-end, largely driven by the Peacock acquisition.

The Peacock acquisition also affected the cash inflow position, which was down slightly to £26.1m, from £27.9m.

In late 2016 the group announced the acquisition of American company Peacock Foods for €547m in a move to strengthen its US business.

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