Confident Greencore eyes further US expansion

Greencore is confident of adding to its customer base in the US — where it currently provides food products to the likes of Starbucks and 7-Eleven — on the back of growing capacity there.

Greencore’s management views last year’s near €700m acquisition of Peacock Foods — which significantly enhances its branded goods and distribution capacity — as being “transformational” allowing it to quadruple its US revenue base.

Chief executive Patrick Coveney identified the addition of new customers [in the US] “on the back of our enlarged footprint and capability” as a prime growth opportunity when he reviewed Greencore’s latest quarterly performance with analysts yesterday. The Dublin-based convenience food group is confident it will meet its earnings targets for the 12 months to the end of September after posting a strong third-quarter update.

On a group-wide basis, Greencore reported revenue of £636.5m (€714m) for the quarter, up 76.6% year-on-year on a reported basis. Despite the continued challenging market conditions, its UK and Ireland division posted revenues of £370.6m, nearly 21% higher than the same period last year.

Trading was challenging in the ready meals, cakes, and desserts segment, but growth was driven by Greencore’s food-to-go offering, with “particularly strong revenue growth” in the Irish ingredients business. The US convenience foods business recorded revenues of £265.9m, 6.6% up on a pro-forma basis. The UK food-to-go business has also received a boost with the acquisition of a sandwich manufacturing facility near Heathrow Airport, which will boost Greencore’s manufacturing capacity.

Greencore’s shares — down nearly 6% this year — were marginally up yesterday. Analyst reaction to its latest update was generally upbeat, though Davy warned of a “modest” downward revision to its full-year forecasts, due to challenges facing the non-UK food-to-go business.

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