Wednesday 21 February 2018

Brexit would cause havoc in Irish food sector - Greencore

Chief executive Patrick Coveney at the AGM. Photo: Gary O’Neill
Chief executive Patrick Coveney at the AGM. Photo: Gary O’Neill
Peter Flanagan

Peter Flanagan

Britain leaving the European Union would have a hugely damaging effect on the food industry, Greencore has warned.

Greencore's share price has tripled in the past four years as the firm's business surges ahead, but company chief executive Patrick Coveney believes that could be threatened by a so-called 'Brexit'.

"I think [Brexit] is very realistic," he said.

"It would be damaging to the food industry in Britain and significantly so.

"It is hard to be precise on what it would mean but it would make raw materials more expensive, would make the cost of people more expensive, would lead to higher interest rates because the Bank of England would have to defend sterling, and so make capital more expensive.

"It would lead to a period of uncertainty over what the UK actually is," he said.

"For one thing it would be very reasonable to assume that there would be a second referendum for Scotland to leave the UK, and that would feed through to political and economic uncertainty," he claimed.

Mr Coveney added that while there were a number of contingencies Greencore could implement, the company would immediately have to deal with perception issues and potential loss of confidence.

Mr Coveney was speaking at his firm's annual general meeting in Dublin yesterday.

The AGM coincided with a trading statement from the company which showed revenue for the 13 weeks to December 25 last year rose 7.7pc to £345.1m (€456m).

While that was broadly in line with analysts' expectations, the company saw US sales rise by little more than 1pc.

Davy Stockbrockers' Cathal Kenny described the business performance in the United States as "muted".

Greencore's US business is dominated by deals it has with Starbucks and convenience chain store 7-Eleven. Between them the two make up about two-thirds of Greencore's US customer base.

Mr Coveney said the drop-off in US performance was due to a consolidation of its operations in the north east US into a single production centre.

In the UK, which remains Greencore's biggest market, sales rose 7.9pc. The company is the main supplier of sandwiches and other ready meals to Marks & Spencer and other supermarkets.

Shares in the business were up slightly after the statement, gaining 2.6pc to reach 361.6 pence in London. The stock is up 27pc in the last year.

Irish Independent

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