Analysis: For first time investors question if CEO is the right man
Greencore suffered a sudden fall from grace yesterday, casting a shadow over the performance of CEO Patrick Coveney.
Some large investors are warning he has entered the last-chance saloon and needs to deliver major contract wins in the US division at the full-year results presentation in December if he is to restore trust in the business.
Up until now, Mr Coveney's determination to establish the food group as a major player in the US market, his success at expanding and reshaping the UK operations, and his sheer salesmanship and eloquence have underpinned investor confidence in Greencore.
But the latest surprise to the downside threatens to permanently dent confidence in his stewardship. For the first time, major investors are questioning whether Mr Coveney is the right man for the job. The Corkman spearheaded Greencore's expansion in the US, and led its purchase of Peacock Foods - an acquisition embraced by the market as its $1bn in annual sales position the group as a major player in that market.
So far, however, the promised synergies have failed to materialise and the market is losing faith in Greencore's ability to ramp up its negligible free cash-flow levels within its targeted time frame.
The legacy business in the US continues to decline.
But what really grates is the group's constant switch in emphasis. As one analyst noted, yesterday's earnings downgrade centred on "earnings that we weren't even made aware of in the January quarterly results".
Mr Coveney signalled there will be big contract wins in the Peacock business by mid FY19.
But given the risky nature of these contracts, there are doubts that he can pull off these much-needed victories.