Greencore beats forecasts despite horse meat crisis
Greencore managed to deliver full-year results that were better than forecast despite the horse-meat scandal having wiped out 10pc of its ready-meal sales in the UK.
The Dublin-based company, which has its stockmarket listing in London, said that revenue in the 12 months to the end of September rose 3pc to £1.19bn (€1.42bn), while operating profit was up 8.1pc at £76.5m (€91.3m).
Greencore is one of the Britain's biggest makers of ready-meals, desserts and sandwiches. Its customers include Tesco, Marks & Spencer and Asda. Each year it manufactures 150 million ready meals, 42 million quiches, three million Christmas cakes and 430 million sandwiches.
It also has a growing footprint in the US where it supplies chains including Starbucks and 7-Eleven.
Chief executive Patrick Coveney said that the company had had a "good year", having delivered "clear commercial, strategic and organisational progress".
He added that revenue in the US had risen by over 60pc and that resources had been realigned behind a "food-to-go-led strategy".
"All this was achieved despite a weak UK consumer environment, limited growth in retail food markets, persistent input cost inflation and the negative impact of the horse-meat scandal," he said.
Mr Coveney told analysts that the company had handled the horse-meat scandal well, but conceded that it had an impact on its ready-meal business.
"It was a relief to conclude that our supply chain was not contaminated by horse meat. However, the impact on industry trust on consumer confidence and, ultimately, on ready-meal volumes was severe," he said.
"Our ready-meal volumes, which are heavily biased towards beef-based products, were hit by at least £50m relative to what they would have been in financial year 2013. That's 10pc of our ready-meal sales or 1.5pc of our overall UK revenues," he explained. "And clearly, that will have a material and had a material contribution and profit impact."
He said the Greencore board took "enormous pride" in how the company dealt with the scandal.
Greencore's prepared meals business includes chilled ready meals, quiches, chilled soup and chilled sauces and represents approximately 25pc of the £1.13bn revenue at its convenience foods segment.
But following several years of near double-digit growth, the chilled ready-meals market rose by just 1.4pc in the last financial year, while the Italian ready-meals market, the major sub-category, declined by 3.7pc. That was primarily because of the horse-meat scandal.
Mr Coveney told analysts that while the company would keep its antenna circling for possible acquisitions, debt reduction remained a key focus.
"We are on a path of actually pretty rapid deleveraging in terms of the free cash flow of our business which we would like to continue," he said.
Shares closed down 1.6pc at 1.81 pence in London.