Inflation and UK strikes slow growth at Irish food group Greencore

Dalton Philips, Greencore's CEO

Sarah Collins

January 26 2023 07:46 AM

Irish convenience food maker Greencore has reported lower than expected volumes as cost pressure and UK industrial action bite.

In a trading update on Thursday, the UK-based manufacturer reported first-quarter revenue was up 19pc year on year to £463m (€525m). Pro forma revenue was up 18.9pc.

Price rises drove the increase, with its ‘Food to Go’ revenue up 14.5pc year on year to £291.1m, but volumes were slightly behind the first quarter last year.

Sushi and salads saw lower demand, while volumes from third-party products were down around 10pc compared to the first three months of last year.

The beginning of 2022 saw disruption from Covid, while this year, railway strikes have impacted the group, it said in a statement.

Revenues were up 27.6pc in its ‘Other Convenience’ category to £171.9m, driven by inflationary effects and new ready meals customers.

Greencore said profit conversion was behind management expectations in the quarter due lower volumes and costs.

“It’s a difficult, volatile market, and the business has got off to a slower start to the year than envisaged,” said chief executive Dalton Philips.

“Given this, we are doubling down on our initiatives on inflation recovery, and in parallel, driving harder and faster to get our cost base to the right level.”

Labour and energy costs remain high, the statement said, despite the cost of raw materials and packaging easing.

However, it said that there would be a “lag” in recovering those costs from customers.

Full-year 2023 outturn is expected to be “at the lower end of market expectations” the trading statement said, due to the lower volumes, the impact of strikes and inflation.

The group is now targeting annual recurring benefits of approximately £30m in 2024.

Mr Philips, who took over four months ago from former CEO Patrick Coveney, said he was “enthusiastic about the longer-term future of Greencore”.

“Strategically we are well positioned for the future growth given our customer base, the categories in which we operate, our operational capabilities and critically the people behind all of this. However, the immediate focus is to tackle the shorter-term self-help actions which set the foundations for margin recovery.”