Greencore shares plummet due to Covid-related revenue slump

Convenience food group expects to bounce back ahead of the market after being hit hard by the collapse of retail sales.

Greencore CEO Patrick Coveney sees revenue recovering this year and hopes for a resumption of shareholder dividends next year.

Greencore shares plummeted 16% — wiping around €150m from the convenience food group’s market value — as it reported a slump in first-half revenues and a loss due to the continuing impact of the Covid restrictions.

However, chief executive Patrick Coveney said Greencore should see a recovery in annual revenues, to pre-Covid levels, this year and hopes to resume shareholder dividends during 2022.

Greencore said its revenues slumped 19%, to £577.1m (€670m), in the six months to the end of March. The group reported a pre-tax loss of £1.8m for the period, compared to a profit of over £27m 12 months previously.

Return to normal expected this year

Despite the tough first half, Greencore is targeting the kind of revenues it was generating before the pandemic, in its current financial year which runs to the end of September. That would suggest a return to revenues of around £1.4bn-£1.5bn.

Mr Coveney said the quicker-than-anticipated forecast for a return to pre-Covid growth levels is based on the £175m worth of new business wins Greencore has achieved over the last 12 months.

The group is also working to renew key existing contracts and is pursuing a pipeline of further new business contracts.

He said the market for Greencore’s core food-to-go range of pre-packed sandwiches, salads, and wraps should recover by the end of 2021, as its main market of Britain resumes normal life and that, because of new business levels, Greencore should grow ahead of the wider market.

Revenues 'only 5% behind pre-Covid levels'

Mr Coveney said he was surprised with the share price movement, but suggested investors were more concerned about the Covid impact on performance — during a time when no official guidance was being given — than about how the business was being run. 

He said the company’s outlook should reassure shareholders. Overall, the Greencore stock has risen around 16% in the past 12 months.

Greencore said it has seen “encouraging revenue momentum” over the first seven weeks of the second half of its current financial year, including strong levels of recovery in the food-to-go segment. 

On an overall group basis, Mr Coveney said second-half revenues are currently running only 5% behind where they were before the Covid crisis, while the food-to-go division is 14% behind.