Greencore aims to double US growth as profit soars
CONVENIENCE food giant Greencore aims to double sales in the US as it steps up plans to take a bigger bite of the market.
Shares in the London-listed firm rose by almost 5pc as it reported that operating profits soared by 14pc in the first half of the year to £37.2m (€45.73m), while revenues grew by 8.2pc to £619.8m (€762m).
The company announced plans for a £30m (€36.9m) investment in a sandwich production plant in Northampton in Britain to sell more to its largest customer, M&S.
The deal follows multi-million dollar investments in the US in a frozen food plant in Minneapolis and sites in Jacksonville and Rhode Island, which will finally allow the food maker to break in to the sandwich market in New York.
Chief executive Patrick Coveney, said the strategic investments will deliver Greencore's frozen breakfast range to areas previously outside its distribution reach. "We feel, particularly in the States, we have bitten off quite a lot in the last six months," said Mr Coveney.
"The capacity of US business in January was $350m (€255.5m) dollars. Post acquisition of Lettieri (Minneapolis), post investment in Jacksonville and once we have our Rhode Island facility coming on stream about this time next years that gives us about $600m (€438m) of capacity in the States.
"We've added a lot to the business in the last four months so I think our core task is to bring that all on stream and to build the team, service and innovation we need to activate that."
In the US alone like for like revenue grew by 25.7pc in the six months to the end of March as the business focused on food to go categories to small store customers.
In its largest market the UK Greencore holds a 37pc share of the sandwich market and the sector enjoyed strong revenue growth of 17.2pc versus market growth of 9.4pc.
While it holds 38pc market share in chilled Italian ready meals, it suffered declines in soup and quiche. Groceries, including sauces, recorded like for like revenue growth of 1.6pc while it sold its Ministry of Cake division for £8m (€9.83m).
Mr Coveney maintains the deliberate investment there is backed with belief there is still scope for improvement in the UK markets.
"We are bang on trend where consumers are going," he added.
One of its largest customers, M&S earlier reported a growth in food sales of 1.7pc. Greencore also serves Aldi and Lidl. Analysts said the results were better than forecast and that the firm is well placed for the remainder of the year.
"No material to change to forecasts is expected but upside risk remains," warned Davy's Cathal Kenny.