Greencore: No interest in sugar industry return

Greencore has no ambitions to return to sugar production despite the new Government saying it will offer State support to prospective sugar beet processors — when sugar quotas expire in 2017 — in a bid to rebuild the industry here.

Wed, 18 May, 2016 - 01:00

Geoff Percival

Speaking yesterday, on the back of a strong set of interim results, Greencore chief executive Patrick Coveney gave an emphatic “no” in relation to the idea.

Greencore — formerly Irish Sugar — still has land in Carlow and Mallow where it used to produce sugar, but sold out of its joint venture which made the Siúcra and McKinney’s sugar brands to partner Nordzucker in 2009.

Greencore is now the largest sandwich maker in the world with the food-to-go element of the convenience food market in the UK and US its main driver of growth.

UK-based sales for that section of the business grew by over 13%, year-on-year, in the six months to the end of March; the first half of Greencore’s financial year.

The British food-to-go sector represents more than 40% of the group’s annual sales. Convenience food sales — incorporating food-to-go and prepared/ready meals — grew by nearly 9%.

Underlying revenue grew by over 17% in the US convenience foods division.

Overall, Greencore’s first half group revenue was up 8.1%, year-on-year, at £691.6m (€881m), while operating profit grew by 8.5% to £43.5m.

The half-year dividend per share rose by 6.25% to 2.55p, adjusted earnings per share were up by nearly 8% at 8.2p and adjusted pre-tax profits were ahead by 9.3% to £36.5m.

A near 6% drop revenue in the non-core ingredients and property division was noted, while operating profits dropped by 25%.

Mr Coveney said management is confident of meeting full-year targets despite a challenging UK market.

“The UK backdrop is expected to remain uncertain given the changing nature of the grocery industry and other potential economic headwinds,” he said before adding “we remain confident in our ability to deliver performance in line with market expectations”.

Mr Coveney reiterated his desire for the UK to remain part of the EU, saying the British food industry would be better served by being in Europe as Brexit would result in rising raw materials and labour costs for industry players.

He said the group shouldn’t have to cut jobs in the event of a Brexit and will continue to prosper whatever the outcome of the June 23 vote.

Meanwhile, initial production from Greencore’s new Seattle manufacturing facility is due to begin next month, while the third phase of a major expansion of its production capabilities at its Northampton facilities in England is on track and will eventually boost UK revenues from £150m to £225m.

In the US, Greencore’s underlying growth was good but product rationalisation after the closure of two facilities — coupled with start-up costs at the new Rhode Island facility — meant the American operations made a modest loss in the period.

It is anticipated that the US division will be profitable in the second half of the year. Greencore’s share price was down by just under 1%, yesterday, at £3.83.

Management also yesterday noted “a strong pipeline of future growth opportunities”, likely to take the form of broadening output to existing clients. Expansion into catering for travel firms is planned.

The group currently produces for the likes of Starbucks, Marks and Spencer and 7-Eleven.