Greencore to earn millions through disposals

By Rod Addy

- Last updated on GMT

Greencore makes a range of ready meal dishes for retail and foodservice customers
Greencore makes a range of ready meal dishes for retail and foodservice customers

Related tags Economics

Greencore is slashing its debt levels by completing deals that will net it more than £24M in the current financial year.

Announcing results for its third financial quarter, the convenience food giant said it had made £8M in cash on the disposal of its Ministry of Cake business, with a further £3M deferred.

In turn, it hoped the sale of land in Littlehampton would deliver net proceeds of £16.5M this financial year. Meantime, it has retained some land, which it aims to market in 2017.

The deals would deliver a total of £24.5M, which would “help to modestly reduce debt”, said Shore Capital analyst Darren Shirley.

In the 13 weeks to June 27, Greencore delivered what Shirley described as a “robust trading performance”​, with revenue up 6.7% on the same period last year and like-for-like sales up 7.5%. Like-for-like growth rose even more strongly by 10.1%.

‘Strong momentum’

“Continued strong momentum in the ‘food-to-go’ category underpinned the UK growth, with sales said to be ‘significantly above’ the c10% market growth, which continues to benefit from the outperformance of the convenience/small store format, aided by favourable weather,”​ said Shirley.

In its interim management statement, issued yesterday (July 29), the business said: “Activity with several key customers resulted in the group outperforming the food-to-go market.”

However, it was not all good news for the company, with sales in its remaining categories “more subdued”​, Shirley added.

Some recovery in Italian ready meals

Ready meals had delivered only low single digit growth, “aided by some evidence of recovery in the Italian ready meals market”​, said Shirley. There had been a small increase in grocery sales, but these had been dampened by continued poor performance in cooking sauces, he observed.

US performance was “moving in the right direction” ​for the firm, he claimed, although it had been restrained by the company’s withdrawal from non-core lines and the transfer to its new, dedicated Rhode Island facility. Greencore expects this to be commissioned in late spring 2015.

Across all three financial quarters this year, Greencore claimed sales rose by 7.7% to £946.2M, ahead of the previous year and 8.7% up on a like-for-like basis.

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