Shares fall by 15% as markets react badly to news

THE world’s biggest sandwich maker, Greencore, felt the impact of its €21 million profit write-down in its share price yesterday.

By close of business, Greencore shares were down nearly 15%, representing one of the biggest one-day slumps in the group’s share price in almost a decade.

At the end of the day’s trading, Greencore was down 14.86% at €2.09, a fall of 36.5 cent on the day.

The drop in the share price wiped €72m off the group’s market value, which fell sharply from €489.5m to €417.5m by close of business.

Analysts reacted badly to the news from the group, which recently announced its intention to expand its business on the West Coast of America.

Paul Meade, food analyst, NCB and Liam Igoe of Goodbody Stockbrokers, revised their share recommendations for the group.

“It is likely to weigh heavily on its share price until confidence in Greencore’s group-wide internal control systems and its numbers are fully re-established, which will take time,” said Meade.

Not only has he cut its rating on the stock to “hold” from “buy”, but he has revised his earnings estimates by 14% for this year and by 13% for 2009.

“This announcement comes as a surprise, especially given the recent revision to earnings and our expectation that the undoubted progress made by Greencore in the convenience foods area in the past three years would continue”, Igoe said.

He has lowered his rating to “add” from a “buy”.

Since 2001, Greencore has pulled out of sugar processing and re-oriented itself as a key player in the British convenience food market, supplying key players in the British grocery trade such as Asda with a range of chilled and ambient foods and mineral water.

It shut its last sugar plant in Mallow in 2006, having previously closed Carlow. That freed up substantial development land in the former sugar plant sites.

The group’s property potential attracted developer Liam Carroll into the company, where he now holds a 29.5% equity stake.