Food group hopes for stable sterling-euro exchange rate

PROVIDED the euro stays at between 85 and 88 pence sterling in 2011, Greencore, the Irish convenience food group, said it expects to deliver strong growth in the current financial year.

The company, which announced an agreement to merge with Northern Foods in mid-November, said it expects a solid upturn in its performance in 2011 in a trading up-date yesterday.

In its statement to the markets, the Dublin-based group said the group’s balance sheet is strong and also stressed the adequate nature of its capital funding.

Greencore said the first three months of its financial year had seen a good underlying performance at its convenience foods division, with continued business revenue of €208.7 million, up 7.6% on the same time the previous year.

Food to Go and Prepared Meals, two key categories within the group’s operations continued to be underpinned by favourable trends and Greencore said their operating performances remained solid.

However, with the sharp increase in prices the cost of ingredients and packaging has risen sharply.

The group said it was managing to cope with this pricier environment through a combination of selling price increases and cost reductions.

Its US business, which it has been developing over the past few years, traded in line with expectations having bought a fresh sandwich business in December.

Greencore is still recommending the merger with Northern Foods to its shareholders.

In a market statement earlier this week, Northern Foods also said the case for a merger with the Irish-based sandwich maker was “compelling.”

This merger was cast into doubt in mid-December when Ranjit Boparan expressed an interest in buying Northern Foods which make’s Fox’s Biscuits and Goodfellas pizzas.

Mr Boparan, one of Britain’s wealthiest self-made businessmen, made his fortune with the 2 Sisters Food Group in West Bromwich. He is a major supplier of chickens to Tesco in Britain and also owns the Harry Ramsden fish and chip brand. He has been given a January 21 deadline to make a bid or withdraw from the fray.

The shares of Northern Foods have continued to trade above the indicative merger price leading some analysts to conclude that a bid will emerge before the deadline date.