Shares in sandwiches, wraps and ready meals maker Greencore tumbled by nearly 5% after an analyst forecast double-digit percentage falls in its earnings and revenues this year on the back of the erosion of its core food-to-go market in the UK.
The Covid-19 lockdown restrictions and rise in home-working across Ireland and the UK have hit sales of on-the-go food products like salads and sandwiches – staples of Greencore’s product line.
In its last Covid-19 impact update, at the end of March, the Dublin-based convenience food group suspended its own financial guidance for its current financial year – which runs to the end of September.
However, Davy said it now expects Greencore’s like-for-like revenues to fall by 10.7% this year; instead of rising by 2% as previously anticipated. It solely bases this forecast on challenges in the food-to-go market.
Davy said its sees Greencore’s pre-tax earnings falling by over 38% this year and by over 15% next year, adding that the key to Greencore’s recovery will be the extent of the virus crisis.
“The duration of lower footfall remains unknown. Social distancing measures, recessionary forces, changing consumer purchasing patterns and new working habits will weigh on demand,” said Davy analyst Roland French.
He said the crisis will accelerate Greencore’s need to extend its product line.