Greencore boss Patrick Coveney has said it could take “a year or two” before sales volumes across its core food-to-go product lines fully recover.
However, he said it is “too early” to suggest Greencore should be re-thinking its overall business strategy.
Since the end of March, the Irish convenience food producer has seen demand for its food-to-go output tank by up to 70%.
The majority of the group’s business falls into this category – which covers everything from office workers grabbing pre-packed sandwiches and salads for lunch, to people buying pre-made savoury food in coffee shop chains, motorway services stations and convenience stores.
Greencore generates the vast majority of its revenues from the UK, where it is the largest maker of pre-packed sandwiches. The group said the Covid-19 outbreak has had a “dramatic and volatile impact” on the shape of UK food consumption.
However, it has also noted some signs of the market stabilising. Speaking on the back of the group’s first half results for the six months to the end of March – which showed a 1.6% increase in revenues to £713m (€798m), but a 14% dive in operating profit to £35.6m – Mr Coveney said Greencore expects a “big step-on” in food-to-go sales in the coming weeks and months as more sections of the British economy return to work and that a recovery is already evident. Its more traditional lines – particularly cooking sauces – have seen sales jump since Covid restrictions were implemented.
Mr Coveney said it is “too early” to question whether Greencore needs to tweak or broaden its business model, saying that can be looked at once the business is back at full steam.
Greencore is still not offering earnings guidance for its current financial year. Analysts expect double digit percentage falls in earnings and revenue this year. Mr Coveney said it would be logical to suggest Greencore will be less profitable in the short-term, but said it has the time, resources and strong balance sheet to build profits back up and recover. He admitted, however, that the business has a big job to do.
Greencore has either suspended or lowered production at four manufacturing sites in the UK, but expects a partial reopening shortly.
Around Covid-19 Mr Coveney criticised the UK government for not being as clear on health policy as other countries, such as Ireland. However, he said that Britain had done a “very good job” in terms of economic, business and liquidity support measures.
Two months ago Greencore scrapped the interim dividend for its last financial year. It has now also done away with the full-year dividend payment and said it will not award an interim divided for its current financial year either.