Greencore reports ‘breakthrough year’

By Mike Stones

- Last updated on GMT

Related tags Revenue Strategic management Uniq

Greencore boss Patrick Coveney described 2012 as 'a breakthrough year'
Greencore boss Patrick Coveney described 2012 as 'a breakthrough year'
Chilled food manufacturer Greencore has reported “a breakthrough year”, with revenue up 44.5% to £1,161.9M due to acquisitions and “business momentum”, for the full year to September 28 2012.

Group operating profit climbed to £70.7M, up by 37% compared with the previous financial year.

Greencore’s chief financial officer Alan Williams told “It’s been a breakthrough year because overall business growth and the acquisition of Uniq have brought revenues back to more than £1bn. But this time, they are pretty much all concentrated in convenience foods.”

Other achievements of the past financial year were the level of absolute earnings growth​, the delivery on the earnings per share and restructuring the UK business together with Uniq and US acquisitions, he said.

The integration of the Uniq business was now nearly complete. Uniq’s Minsterley site will be transferred to Müller once the Christmas dessert line has finished.

Hain Daniels

Greencore had also completed the integration of the International Cuisine business bought from Hain Daniels late in August. “This is small in the scale of things and will be managed as part of the prepared meals category,”​ said Williams.

Poor global harvests were contributing to higher than expected input cost inflation but Greencore had developed strategies to mitigate its impact. “In the previous year just ended we had 4% input cost inflation and we had a similar level in the year to the end of September 2011,”​ he said.

“Given the poor harvest, there is more input cost inflation than we were anticipating. Across the portolio, it looks like it’s going to be lower than 4% but it is very varied from category-to-category.”​ Some bread price rises could be in the high single digits or even at 10% level.

But lean manufacturing and finding alternative inputs that delivered the same quality were helping to offset the rises.

Turning to Greencore’s “really big year in the US”, Williams said: “We are increasingly confident that we have the right business model but we want to remain circumspect until we see really strong results come through the business.

“We are clear that focusing on the food-to-go is the way to focus in the US. So, in terms of the portfolio in the US, we will have something like 85% of our revenues in food-to-go and, from a channel split, 80% of that will be into convenience stores and 20% into grocery formats.”

Williams said many US stores give much less space to convenience meals, sandwiches and chilled soups than their UK equivalents and expanding the fresh food offering provided opportunities for growth.

Good credentials

“They are looking for a partner that brings good credentials in terms of innovation and being able to manage short shelf-life products without running up a huge waste bill. We think that plays to our core competency in the UK and we can transfer some of those learnings to the US.”

Greencore’s US operations suffered no lasting damage from Superstorm Sandy​.

While Williams refused to rule out more acquisitions next year, he said 2013 would be a year of consolidation. “Deleveraging ​[reducing borrowing] remains the key area of focus throughout FY 13​ [financial year 2013]. That said, if we see a potential bolt-on opportunity that fits our strategy we will still look. But the focus is on consolidating what we have already got rather than casting the net for more acquisitions.”​ 

Patrick Coveney, ceo, said:"2012 was a breakthrough year for Greencore. The acquisition of Uniq has reshaped the performance, scale, capability and long-term prospects of our group, with all elements of the targeted benefits now delivered.

“More broadly, our strategy, enlarged portfolio and team are working well as we continue to build our industry-leading convenience food businesses in the UK and increasingly in the US.”

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