Greencore defies malaise in UK food business to post strong annual results
GREENCORE yesterday shook off the malaise in the UK consumer foods business to post strong annual results.
The ready-meals company, which on Monday ended talks to sell itself, reported full-year profits to the end of September of £19.85m (€23m), down from £21.5m in 2010. Revenue was up 8.7pc at £804m. The company took an exceptional charge of £11.7m.
Greencore reported its numbers in sterling for the first time, ahead of a move to the London Stock Exchange in the spring.
The results, which were marginally ahead of market expectations, came despite what the UK-focused company called the "the most challenging market conditions in many years" in the Convenience Foods Division. Revenue from that sector rose 8pc even as margins fell by 20 basis points.
At an operating level, profits were essentially flat at £51.5m. Adjusted earnings per share jumped by a fifth to 13.9p.
Looking ahead, the company anticipated higher input costs for the year, but said it had made "good progress" in offsetting those costs. The pension deficit soared, however, to £130m from £100m.
Uniq, the UK sandwich maker which Greencore bought in July, is being integrated "to plan" and trading overall has made a good start to the year.
Company chief executive Patrick Coveney was pleased with the results, although he said he would "always like to do better" in a year he described as "transformational".
"Our underlying business continues to trade well. The acquisitions we made during the year should be taken as a clear indication of our long-term strategy of supplementing organic growth with strategic corporate activity, and we are delighted with the way that the businesses are being quickly and efficiently integrated into the group.
"Whilst the UK and US food markets remain challenging, we are confident of being able to drive growth and shareholder value through close customer relationships, strong operational performance and outstanding products," he added.
Mr Coveney was coy on the details that led to the collapse of talks between Greencore and an unnamed suitor, believed to be US private equity house Clayton, Dubilier & Rice, but acknowledged the inability to raise funding on the debt markets at this time presented a major obstacle to any potential takeover of the company.
"We certainly didn't go looking for a buyer and we'll continue to grow the business in line with our current strategy," he added.
The results were welcomed by the market, especially given the performance of other peers in the UK consumer foods space which has struggled in the past year.
Davy Stockbrokers' Aiden O'Donnell said: "From an operation perspective, the statement indicates that Greencore managed well in what was undoubtedly a very tough year.
"The overall business has made a good start to the year (but) the business still carries high levels of gearing and the increase in the pension deficit in the period is alarming as we enter another year, which is likely to be difficult for consumer-facing companies in the UK."
Greencore closed up 1.3pc at 65c.