Greencore shares fall as Brexit concerns mount

Greencore shares fell over 3% yesterday as the Irish-headquartered convenience food group expressed near-term concerns from rising Brexit uncertainty. The now solely UK-focused business reported a near 13% rise in annual pre-tax profit to £17.8m (€20m). Group revenue, for the year to the end of September, rose by 4.2% to just under £1.5bn.

The group’s share price, which is down 17% in the past year, fell over 5% at one point yesterday before paring some of those losses.

Chief executive Patrick Coveney (below) said Greencore’s UK concerns are 100% Brexit-related and near-term. A no-deal Brexit would affect consumer confidence in the UK as well as putting pressure on the sourcing of some ingredients, he said.

“Despite the short-term uncertainties of Brexit, our scale, depth and expertise in attractive and structurally-growing food categories mean that we are confident in the future growth prospects for Greencore,” said Mr Coveney.

He said the company is well on top of workforce issues and that any labour concerns, arising from the UK’s exit from the EU, would be a medium-term issue.

Half of Greencore’s employees come from the UK, with 35% non-British EU nationals and 15% coming from outside of the EU.

Greencore also said it will seek to get more clarity on tax implications for shareholders ahead of it returning around €570m to investors in the new year.

The convenience food group recently announced plans to return £509m in cash to shareholders as part of the $1.1m (€950m) sale of its US operations. It has changed tack on how it plans to distribute the money — from a special dividend to a tender offer for investors’ shares.

Nearly 20% of shareholders voted against the special dividend plan, last month, many upset that the payments would incur income tax. Greencore said consultation with shareholders, since then, showed a preference for a choice regarding participation in the capital return. If the tender offer is not fully participated in, remaining proceeds of the £509m will be returned via a special dividend. The capital return is now expected to be completed during the second quarter of next year.

“Greencore’s results bring closure to its US journey. Investor focus returns solely to its UK franchise, which is underpinned by its food-to-go platform, the sole driver of profit growth in 2018,” said Davy.

“Its qualitative outlook statement calls for continued underlying revenue and profit growth in 2019 against a more tempered revenue environment, productivity initiatives will take on greater significance,” it said.

Greencore shares fell over 3% yesterday as the Irish-headquartered convenience food group expressed near-term concerns from rising Brexit uncertainty. The now solely UK-focused business reported a near 13% rise in annual pre-tax profit to £17.8m (€20m). Group revenue, for the year to the end of September, rose by 4.2% to just under £1.5bn.

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