Monday 16 September 2019

Greencore reports operating loss of £4.4m as 'challenges' in US division take their toll

Greencore’s Patrick Coveney
Greencore’s Patrick Coveney
Ellie Donnelly

Ellie Donnelly

Convenience food giant Greencore has reported a group operating loss of £4.4m (€5m) in the six months to 30 March.

However the company’s revenue for the period performed considerably stronger, increasing by 22.6pc to £1.2bn during the six month period.

While adjusted earnings before interest, taxation, depreciation, and amortisation increased 9.4pc during the period to £86.5m.

Commenting on the results, Greencore CEO Patrick Coveney said that the company’s profit growth was impacted by the “challenges experienced in the original part of Greencore's US division”.

“As a result of the significant strategic, network and organisational measures that we have taken in order to address these challenges, we believe that our US business is now much better positioned to deliver an improved performance in the second half of the year and beyond,” Mr Coveney said.

The company previously announced that it was shutting its Rhode Island facility in the US, while Mr Coveney will "take a direct role in the strategic, organisational and operational leadership of Greencore US", spending half of his time in the US.

Included in the loss were pre-tax exceptional items of £53.1m.

Overall, the Dublin-headquartered food group recorded strong underlying revenue growth in both the UK and the US.

In the UK and Ireland the company said it was continuing to develop new channel and product opportunities, while in the US Greencore said it had a refined and refocussed strategy.

The US strategy will now be focused around capitalising on growth opportunities in value added, assembly-led manufacturing with its Branded Food Partners and improving operational performance and efficiencies in assets dedicated to retail partners.

Looking forwards and the group said that it anticipates good organic growth in the seasonally more significant second half of the financial year.

“UK profit conversion will be driven by strong year-on-year performance in Food to Go and US profitability will be supported by strong year on year performance in the former Peacock Foods business,” Mr Conveney said.

Earlier this month Luxembourg-based investment firm Axxion built up more than a 3pc stake in the company.

It's a much-needed vote of confidence for embattled Greencore as it fights to strengthen its position in the United States and faces uncertainty in the UK as Sainsbury's and Asda plan to merge.

Greencore is the sole sandwich supplier to the two supermarket chains Sainsbury's and Asda.

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