Tuesday 20 February 2018

Coveney denies sale bid as Greencore posts small loss

Company was hit by €17.6m costs over its attempted merger with Northern Foods

Greencore chief Patrick Coveney denies sale rumours
Greencore chief Patrick Coveney denies sale rumours

Peter Flanagan

GREENCORE chief executive Patrick Coveney yesterday denied the company was trying to sell itself as he counted the cost of its failed merger with Northern Foods.

Mr Coveney played down reports that he was looking at selling Greencore to the highest bidder after the company reported a small loss in the first half of its year.

"After what happened with Northern, there are always going to be rumours about the company, that's part of the business we're in."

He added that reports the company had appointed advisers to expedite a sale of the business were "incorrect".

"I'm looking to get the company past the point where we are subject to the rumour mill, but inevitably it will take time."

Mr Coveney was speaking after exceptional costs from that merger bid pushed Greencore into a €657,000 after-tax loss for the half-year ended March 25.

Group operating profit stood at €27m on the back of revenue which increased nearly 8pc to €442m. Adjusted earnings per share were up more than 35pc to 6.8c on a constant currency basis but margins fell 0.4pc as inflation took its toll.

Those numbers were hit by a €17.6m charge relating to the attempted merger, leading to a loss overall.

"To have an unconditional offer approved by both company boards, as our offer to Northern was, does take time and capital.

"The finance facilities we had arranged for the deal had to be retained until we were sure we would not make a new offer so there were always going to be costs related to that," said Mr Coveney.

Overall, Mr Coveney said he was content with the latest results, which were in line with market expectations.

The convenience foods business performed "solidly", especially given "a more volatile consumer base" which is expected to be subdued through the year

"The seasonally more important second half of the year has started well and we continue to experience strong demand for our convenience food offerings.

"With continued good revenue growth coupled with a material reduction in interest charges the board anticipates delivering adjusted EPS in line with market expectations," the company said.

Goodbody Stockbrokers' Liam Igoe said that given the market conditions, these interim results reflect a robust performance by Greencore in difficult market conditions.

"We do not anticipate making changes to our forecasts at this stage," he said.

Davy Stockbrokers' Aiden O'Donnell agreed, pointing to the firm's agreement of a new €319m five year debt facility, replacing a €324m facility.

"In the context of a weak consumer environment and raw material headwinds, H1 was reasonable. "The new financing package as this gives management greater flexibility."

Greencore closed down 4.56pc at €1.15.

Irish Independent

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