Friday 27 April 2018

Patience wearing thin at Greencore

SINCE becoming Greencore chief executive at the beginning of April 2008, Patrick Coveney has presided over a 70 per cent fall in the company's share price. Although he saw off his critics at the February 9 AGM, investor patience is beginning to wear thin.

Mr Coveney has been taken to task for his "excessive" €1.4m pay packet but his remuneration is no more than a side issue. If Greencore were firing on all cylinders most shareholders wouldn't care less about his pay. But it isn't. Since April 2008 the share price has dropped from 242p (Greencore's share price and accounts are denominated in sterling) to just 69p -- a 71 per cent fall.

It's not difficult to see why. Greencore recorded earnings (after-tax profits) per share of 17.1c (then worth 13.5p) from its continuing operations in the year ended September 2008. For the year to September 2011 earnings were virtually unchanged at 13.9p per share.

So despite spending almost €200m on acquisitions over the past four years, Greencore has gone nowhere on Mr Coveney's watch.

Last year's £113m Uniq acquisition, which was largely funded by a five-for-six rights issue that raised €80m and resulted in massive dilution for existing shareholders, means that earnings are likely to remain under pressure.

The February 9 trading statement revealed that continuing revenues were up almost 50 per cent in the four months to the end of January. However, the 83 per cent increase in the number of shares resulting from the rights issue almost certainly means that this won't be enough to prevent a further double-digit dip in earnings.

Sunday Indo Business

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