New product lines lift Greencore’s food-to-go sales
The Convenience Foods division posted revenue of £331.9M, up by 6.9% on the previous year on a reported basis and up by 6.3% on a like-for-like basis. Elsewhere UK revenues were said to be more subdued.
Total revenue reached £346.5M; a rise of 6.2% on the prior year.
The firm’s UK business spans the convenience food market across food-to-go, chilled prepared meals, chilled soups and sauces, ambient sauces and pickles, cakes and desserts and Yorkshire puddings.
US sales were 22.1% higher than the previous year on a like-for-like basis – driven mainly by the roll out of new lines with its main customers. The focus remained on lifting capacity at its US plants.
Greencore’s new facility
Greencore’s new facility in Quonset, Rhode Island, started production in April, while the Newburyport site had been closed. The transfer of production from the Brockton factory in Massachusetts will start soon, ahead of the site’s closure later this year. Its US business served the convenience and small store channels and the grocery channel.
Total revenue for the 39 weeks to June 26 reached £986.3M, 4.2% ahead of the previous year.
So far this year, revenue from Greencore’s Convenience Foods division was £946.6M, 5.4% higher than the prior year on both a reported and a like-for-like basis.
The core UK grocery retail market remained challenging with high levels of change, said Greencore in a statement accompanying the results. “The combination of modest deflation in ingredients and packaging costs, together with price investment by grocery retailers, has resulted in value growth lagging behind volume in a number of our product markets,” it said.
‘Complex capacity increase’
The group remained focused on delivering “exceptional standards” for customers and implementing “complex capacity increase projects” in both the UK and US.
The business remained confident of delivering adjusted earnings per share (EPS) growth for the financial year within the range of market expectations.
City analyst Shore Capital predicted EPS growth of 17.4p for its 2015 financial year and current pre-tax profit of £77.3M.
Greencore faced a higher wages bill after the introduction of the national living wage – which Patrick Coveney predicted would lead to inflationary pressure across the UK grocery supply chain.
But Black and Shirley believed the manufacturer’s presence in the still fast-growing UK food-to-go market and growing US market offered good growth prospects.
“With the US activities potentially on the cusp of margin expansion and so becoming a more meaningful EBIT [earnings before interest and tax] driver, despite trading on what we see as demanding multiples we reiterate our ‘hold’ stance on the stock.”
Meanwhile, Greencore is due to release its financial year 2015 preliminary results on Tuesday November 24.
