First-quarter revenues up 4.4% for Greencore

Irish convenience foods producer, Greencore is on course to meet financial targets this year, having seen group revenues rise over 4% in the first quarter of its current financial year.

In a trading update, covering the three months to the end of December, the group said overall revenue of £331.9m (€444m) was generated in the period; marking a 3.6% rise on a reported basis and a 4.4% like-for-like increase.

In its key convenience foods division (the ingredients and property division, which only makes up around 5% of current group activity saw a near 23% drop in revenues to £11.5m), Greencore saw a 5.4% like-for-like jump in first quarter sales to £320.4m.

In the UK, like-for-like revenue was up 3.6%. The overall grocery market there remains challenging but Greencore has been bucking the trend with growth in the ‘food-to-go’ segment of pre-packed wraps, sandwiches, salads and paninis.

The group already controls more than 40% of this lucrative sub-sector of the market in the UK and will see its share of the market grow to around 50% when volume increases at its facilities in Northampton, where it is expanding its existing plant and building a secondary facility, next year.

Meanwhile, in the US, where Greencore is growing rapidly on the ground and via customer spread, the group saw a 34.1% reported basis revenue increase in the first quarter and a 19.5% rise, when measured on a like-for-like basis.

Analysts suggested that yesterday’s upbeat trading update suggests 2015 will be another year of strong growth for Greencore in both its core geographical markets.

“The group remains comfortable with current market expectations,” noted Liam Igoe, food industry analyst with Goodbody Stockbrokers.

“Our full-year like-for-like growth of 5.8% for the UK convenience foods business and 24% like-for-like growth in the US looks well attainable, given that new contract wins in both the UK and US will make an increasing contribution to like-for-like growth as the year progresses,” he added.

“Greencore’s focus has shifted from being a broadly-based convenience foods supplier to a focused food-to-go supplier. When the current phase of incremental investment completes in the US and UK, food-to-go will account for 60% to 70% of group revenue from around 50% to 55% today. Growth drivers are a mix of market growth for food-to-go and growth in the convenience format,” said Cathal Kenny of Davy Stockbrokers.

In the trading update, Greencore added that its financial position remains strong, with good headroom within existing debt facilities. With regards to its existing Northampton site, Greencore’s management made some additional comments at yesterday’s AGM.

The company came under fire before Christmas over work practices at the site when comments were made about having to look to eastern Europe for workers on account of there being a lack of available local candidates.

Chairman, Gary Kennedy yesterday admitted that the initial publicity around the furore was not handled well.

He maintained the group is “a very responsible employer”, with 36 nationalities employed at Northampton. He also said that claims of some workers being on “zero-hour contracts” was false and claims of widespread minimum wage workers was exaggerated.