Greencore ‘leaner and stronger’ after restructure

By Noli Dinkovski contact

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Greencore: ‘Clear financial and operational progress’ made
Greencore: ‘Clear financial and operational progress’ made
Greencore is in a “leaner and stronger” position to grow UK sales after posting strong half-year figures in the wake of a period of restructuring that included the sale of its US business, its group chief financial officer has claimed.

The convenience food manufacturer was able to “strike a confident tone”​, and its balance sheet and manufacturing assets were a basis from which to grow, Eoin Tonge told Food Manufacture​.

Tonge’s comments came as Greencore revealed adjusted operating profit increased 0.9% to £44.7m for the six months to 29 March 2019. Pre-tax profit jumped to £5.7m from £3.8m for the equivalent six-month period in 2017/18.

Pro-forma revenue grew by 5.4% in continuing operations, driven by 7% growth in food-to-go categories, which make up around two-thirds of all Greencore’s sales.

Actual group revenue fell 4.6% to £701.4m. Greencore said this primarily reflected the impact of site disposals and closures. Last year, the company sold its Hull desserts factory to Bright Blue Foods, and consolidated its ready meal business by closing sites in Evercreech, Somerset, and Kiveton, near Sheffield. Most of the ready meal production was moved to Consett in County Durham.

Greencore pulled out of the US market in November after selling its stateside business to contract manufacturer Hearthside Food Solutions for $1.1bn (£817m).

‘The heavy lifting is done’

Following the disposals, Tonge expected revenue to stabilise. We’ve done quite a lot of work over the past two years refining our portfolio. The heavy lifting is done, and we’re now more focused on sales and operational performance.”

He added that there was currently a “whole heap”​ of investments taking place across its 15 remaining UK manufacturing sites.

Not on pure automation, but more around technology to assist effective manufacturing. So that’s been a big focus for pretty much all of our plants,”​ Tonge said.

“We are just in the middle of investing in our Wisbech facility, which has taken on some of our volume that we moved out of Kiverton. We’ve also done a lot of work on our facility in Heathrow, which we’ve had for 18 months. It’s a smaller food-to-go facility, but we’ve been leveraging that facility to take on more salads and more bespoke-type ranges.”

In its interim financial report, Greencore said its half-year performance was delivered against the continued backdrop of a “challenging UK trading environment, characterised by intense retail competition, cost inflation, and cautious consumer demand particularly in the context of uncertainty around Brexit”​.

Tonge said Greencore had been “pretty consistent”​ in the three years since the Brexit vote that the company’s biggest concern was the labour market.

‘We haven’t suffered’

“We haven’t suffered in any kind of major way since the vote, but as policy evolves over the next few years, we’ll be watching very carefully. And we, like a lot of other food manufacturers, are working with various trade bodies to remind the Government about the importance of the manufacturing labour force in the UK.”

Commenting on the results, chief executive Patrick Coveney said Greencore had experienced a good first half to the year, with clear financial and operational progress”​ made.

Coveney added: “We have reshaped and strengthened our capital structure, and now have a robust foundation from which to pursue a range of new food-to-go product and channel opportunities.

“While recognising that trading conditions in the wider UK grocery sector remain challenging, the growth outlook for our business continues to be encouraging, underpinned by favourable consumer trends and ongoing investment by our customers.”

Greencore also used the results to announce the promotion of Peter Haden to chief operating officer (COO). Haden, who joined Greencore in 2015 as chief development officer, and was appointed chief executive of the UK division in 2018, has also become an executive director.

Greencore said his transition to the Group COO and board roles reflected both the fact that the Group now had “a single, integrated leadership structure”​, following the disposal of its US business in November 2018, and his sustained contribution to the operational and strategic agenda of the Group.

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