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Greencore trades 'in line with expectations' amid high demand for longer-life products

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Greencore chief executive Patrick Coveney

Greencore chief executive Patrick Coveney

Greencore chief executive Patrick Coveney

Food-to-go group Greencore said it is trading "broadly in line with expectations" five months into its financial year.

Over the last 10 days, the impact of the coronavirus has become more pronounced on the wider UK food industry, the grocery sector - where it supplies the majority of its products - and on the company, it said in a trading update.

Since the recent emergence of the deadly coronavirus, the group has experienced a "pronounced change" in demand across its product mix.

Longer-shelf-life products such as ready meals, soups and quiches, which account for around 30pc of Greencore's sales, have performed strongly over the last 10 days, analysts say, as people begin to stockpile food.

Meanwhile, customers' purchases of short-shelf-life products have appeared more restrained.

Greencore's supply chain and production network have remained fully operational and levels of customer service have been "as strong as ever".

Patrick Coveney, Greencore CEO, said: "We have three priorities as we lead our group through the Covid-19 pandemic - keeping our colleagues safe, feeding the UK, and protecting our business.

"We are closely monitoring all aspects of our business and are confident that we have the team, customer partnerships and protocols in place to maintain food supply through this uncertain period."

The group's cash generation has proceeded in line with its plan, and Greencore said it retains "substantial" financial headroom, with significant access to cash (€45.5m at year end) and undrawn committed debt facilities of £175m (€190m).

It has no debt maturities in any facilities in the next 18 months.

Looking forward, the company warned that it is too early to predict the impact of the coronavirus in its full financial year 2020 results, given the current level of uncertainty that exists.

Commenting on the update, analysts at Davy Stockbrokers said they believe governments will ensure that essential supply chains continue to function.

"This includes food retailers and their upstream manufacturing partners, such as Greencore. Liquidity and an operational production network will be critical pre-requisites in navigating the current crisis - the duration of which is unknown," Roland French and Cathal Kenny of Davy Stockbrokers said in a note.

"We believe that Greencore has sufficient liquidity to withstand any demand shock over the coming months."

Yesterday, shares in the company, which is headed by Tánaiste Simon Coveney's brother, were up almost 7pc in afternoon trading in London.

While the company was established by the Irish Government in 1991 following the privatisation of Irish Sugar, today its main market is in the UK.

Greencore produces around 123 million chilled prepared meals each year, as well as 31 million quiches, and 44 million chilled soups and sauces.

The group will report its financial year 2020 interim results on May 19.

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