Thursday 20 June 2019

Greencore on red alert for Brexit - Coveney

Stockpiling paused as date moves

Acquisitions: Patrick Coveney said Greencore will look at purchases in the food-to-go space
Acquisitions: Patrick Coveney said Greencore will look at purchases in the food-to-go space
John Mulligan

John Mulligan

GREENCORE has ceased stockpiling ingredients in the UK after the likely Brexit date was extended to October.

But CEO Patrick Coveney said the group remains ready to initiate contingency plans including airlifts of produce if a hard exit by the UK from the EU looks likely.

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Earlier this year, Greencore - which manufactures about 706 million food-to-go items including sandwiches every year - had been stockpiling ingredients from prawns to tomato paste as it prepared for a hard Brexit in March. But with the Brexit deadline now extended to the end of October, companies have more breathing room to ready themselves for such a scenario.

"We're not really stockpiling anything at the moment," Mr Coveney told the Irish Independent. "But we're not seeing any sign of a [Brexit] solution, so we'll be using the same contingency planning that we had earlier this year."

The company had activated an airfreight contingency for flying some types of salad leaf from southern Europe in advance in the previous March deadline.

Mr Coveney, the brother of Tánaiste and Foreign Affairs Minister Simon Coveney, was speaking as Greencore released first-half financial results.

Its reported revenue for the six months to the end of March fell 4.6pc to £701.4m (€798.7m), but was 5.4pc higher on a pro-forma basis. That reflected the disposal of UK sites and businesses. Greencore also exited its US business last October.

The group's adjusted operating profit in the latest period edged 0.9pc higher to £44.7m (€50.9m).

Mr Coveney said that while the UK grocery market remains challenging, Greencore's important food-to-go category of products outperformed the wider market, posting sales growth of 7pc.

Greencore's food-to-go category accounted for 64pc of group revenue from continuing operations in the first half of the financial year.

He added that Greencore will pursue expansion in the UK market organically but also via a significant number of small-scale acquisitions.

The company has committed financial facilities totalling £461m (€524.8m). Its net debt fell to £284.1m (€323.4m) at the end of March from £501.1m at the its last financial year as it used some proceeds from the US sale to cut the figure.

Mr Coveney pointed out that the acquisition of Peacock in 2016 for $750m was significant in scale for Greencore.

"I think we're much more likely to be in a space of doing a whole series of significantly smaller things as opposed to one very large thing like that," he said in relation to future acquisition activity in the food-to-go area.

"Each of those steps will be individually modest," he said.

Irish Independent

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