Greencore posts €27m loss, but plots US move

PROFITS at Irish food company Greencore were hit by a fall in the value of sterling, but the company remains on track to expand in the US.

Shares in Greencore fell almost 9% to €1.04 yesterday after the company, which is Britain’s largest sandwich maker, reported a pre-tax loss of €27 million for the six months to March 27, 2009, compared with a profit of €24m in the same period last year.

It also reported a 17.8% fall in first-half adjusted earnings per share to €7.40 and saw operating profits fall 11.7% to €31.4m.

Greencore also cut its interim dividend to 3 cents per share from 5.3 cents.

Bloxham stockbrokers said overall, these are not the signs of a business performing well. “We struggle to comprehend what exactly is going on. The headlines in the results release preach about a ‘resilient performance’ in convenience foods and a ‘good performance’ in ingredients, but the hard numbers point elsewhere,” they said.

Greencore said it planned further development in the US where its convenience food division was on target to double its contribution to group sales in 2009.

Greencore, which makes prepared meals under the Weight Watchers brand, concluded a 10-year deal to develop chilled foods for the brand in the US last year following the acquisition of US-based Home Made Brand Foods in April.

Greencore chief executive Patrick Coveney, who is the brother of Cork Fine Gael TD Simon Coveney, said trading in the first half of the year held up well in “challenging conditions”.

“We remain on track to deliver operating profit in line with 2008 on a constant-currency basis, albeit with the seasonally more important summer period to come,” he said. Mr Coveney said the business has been stabilised, but they are not going to be complacent.

He said they are “very pleased” with how well the Weight Watchers brand is doing in Britain.

“The Greencore-owned brands have not worked for us and we’re going to step away from it,” he said.

Greencore sold its Drummonds agricultural feed business as part of an overhaul. The restructuring contributed to one-time costs of €25.1m. Sales from continuing operations fell 15% to €550.2m.

Numis cut Greencore’s rating to “reduce” from “hold” yesterday.