Thursday 14 December 2017

Greencore briefing gives investors 'comfort' on US

Patrick Coveney, CEO of Greencore
Patrick Coveney, CEO of Greencore
John Mulligan

John Mulligan

A CAPITAL markets day held by food group Greencore in Chicago for investors has "provided comfort" about the group's model sustainability, customer engagement and the associated revenue opportunity in the US, according to Davy Stockbrokers.

Greencore has been targeting increased investment in the United States, where customers include 7-Eleven, Starbucks, Dole, Nestle and Kellogg's.

In January, Greencore sealed a $747m acquisition of Illinois-based Peacock Foods, which itself has annual sales of about $1bn.

It also deepened its US connections by appointing former US Ambassador to Ireland, Kevin O'Malley, to its board earlier this year.

Greencore, whose CEO is Patrick Coveney, told investors that the convenience food market in the US is growing, and that the competitive base is fragmented.

It added that growth opportunities in the United States will emerge from brands and categories that the company already serves there, as well as by developing further outsourced solutions with existing customers and providing them with innovative products.

Davy Stockbrokers analyst Cathal Kenny said that this week's capital markets day "should help change the narrative around Peacock Foods".

"Prior to the capital markets day, we believed the market was appraising the perceived risks associated with Peacock rather than its potential," he said.

"The capital markets day provided comfort regarding the key debates on business model sustainability, customer engagement and the associated revenue opportunity for the enhanced US footprint."

Greencore has a huge convenience food business in the UK and is the world's largest sandwich maker.

UK customers for meals, sandwiches and other convenience food include major chains such as Sainsbury's, Asda, and M&S.

Analyst Jason Molins at Goodbody Stockbrokers said Greencore stated in Chicago that the Peacock business performance had surpassed its own expectations since acquisition.

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