Greencore shares fall further despite attempts at calm

Shares in consumer foods group Greencore fell a further 8% yesterday, even after management rushed to soothe investor fears over share price erosion in recent days.

In a brief stock exchange announcement, the Dublin-based group, which provides food products to the likes of Marks and Spencer, Starbucks and 7-Eleven, said it had noted recent weakness in its share price but was “not aware of any developments” since the publication of its third quarter trading statement, last month, that change the outlook contained in that statement.

“As outlined in that statement, the integration of our US business is on track and we continue to be encouraged by the pipeline of commercial opportunities being explored with existing and new customers,” management said yesterday.

Greencore’s shares are down by over 17% in the past six months and have seen daily falls of over 8% in each of the last two days.

While ceasing frozen food production at one of its US sites will have a minimal impact on profits, the group’s US growth targets are largely being pinned on opportunities stemming from last year’s €700m acquisition of Peacock Foods, which enhances Greencore’s distribution capacity and could quadruple its US revenue base.

Earlier this year, investors reacted badly to news of Greencore customer Tyson Foods buying a rival company, for fear of Greencore losing a major customer. But the Irish group said such a move was unlikely to hamper its US growth ambitions. Management has also said the recent European contaminated egg issue has been contained.

“We are not going to assume that something untoward is happening at Greencore...but prefer to base our assumptions around recent updates, guidance and industry trends,” said Merrion Private analyst Darren McKinley.