Greencore ‘on course for targets’

GROUP sales of €442 million were achieved by Greencore for the six months to March 25, an increase of 4.4% on a constant currency basis.

Operating profit fell 2.2% to €27m in the same period and despite tough trading conditions the group’s adjusted earnings per share were up 35.4% to 6.8c.

Greencore said it expects to achieve the full-year targets previously set despite the setbacks caused by the severe weather conditions in December/January.

The results were in line with expectations but did not impress the markets and shares dipped yesterday.

They closed on Monday at €1.21 on the back of rumours suggesting Greencore was to be sold on.

Those rumours seem wide of the mark given Barclay Capital has been hired to advise on acquisitions.

The group said its key divisions of food-to-go and prepared meals outperformed their sectors.

Sandwich sales, its chief food-to-go option, grew 8.4% against 2.6% for the market in general. Chilled ready meals rose 19.3% against an overall market value increase of 9.4%.

Food sales now account for over 90% of the group’s total sales with its US operations accounting for a small part of the total figure.

Ingredients and property accounted for less than 10% of sales and for €1m of operating profits.

This is down €800,000 on the first half of 2010 due to less activity in the group’s property division.

The group was also hit by a charge of €17.7m, squandered on its failed move to merge with Northern Foods that would have doubled turnover and made it a strategic player in the convenience food sector.

Company debt rose from €193.4m at year-end to €236.7m. Of that, €13m related to small-time acquisitions, exceptional cash payments of €14.4m and working capital outflows of €20.6m.

Chief executive Patrick Coveney said the business continues to perform well, despite challenges in the US and British food markets.

“We are delighted to have delivered sales growth for the first half of 7.9%, and, in particular, to have driven this through to a 42% growth in continuing adjusted earnings per share,” he said.

Referring to the failed Northern Foods bid Mr Coveney said “it was disappointing not to be able to execute a combination with Northern Foods”.

“We learned an enormous amount from the process and we are optimistic about our ability to drive growth and shareholder value from both our existing business and from corporate development in the months and years ahead,” he said.