Buoyant summer at Greencore, but growth slows in US
The group was also on track to record strong operating profit growth in the division for the full year, said bosses, highlighting a “more favourable capacity environment” and improved operating efficiencies.
“The Group expects, in the full year, to record an operating margin on continuing operations in the Convenience Foods division modestly in excess of the 6.5% achieved in the first half.
“The UK consumer trend of increased 'at home' food consumption continues to support demand for our overall food offering. Additionally, an increase in smaller convenience retail store formats is underpinning food to go volume in particular.”
However, the overall sales growth in the UK had been “driven predominantly by volume with pricing flat overall”, said the firm.
Slight slowdown across the pond
Sales in the US were up 20% (on a constant currency basis) – slightly below the 27% growth in the first half - said the firm. “Sales of salads over the summer months have been slower than expected and we have been comparing against a more demanding run rate in food to go than in the earlier part of the year.”
It added: “While good sales growth is expected in full year 2011 it is unlikely to be at levels seen over the past 18 months from our existing customers and facilities. We continue to adopt a measured approach to US acquisitions and development seeking out value creating opportunities against specific returns hurdles.”
Shore Capital analyst Clive Black said: “We remain positive on Greencore stock, pointing to its good prospects in the UK and the US, undemanding stock valuation and especially attractive dividend yield.”
He added: “Input cost inflation is not a major issue at this stage with forward buying, and management is to our minds speaking sensibly about letting the some of the dust settle on the present wheat hiatus"
Greencore makes sandwiches, chilled prepared meals, chilled soups and sauces, ambient sauces, pickles, cakes, desserts and Yorkshire puddings.
