Greencore: Brexit would hit UK's food sector

Britain pulling out of the EU would be significantly damaging to that country’s food industry, Greencore chief executive Patrick Coveney warned yesterday.

He was speaking after the Irish convenience food group’s AGM in Dublin, at which management delivered an upbeat overview of the business to attending shareholders.

An accompanying trading update for the first quarter of its current financial year, covering the three months to the end of December, showed group revenues jumped by 7.2% (6.8% when measured in constant currency terms) year-on-year to £356m (€470m) in the period.

The core convenience foods division recorded first- quarter revenues of £345.1m, up nearly 8% on a reported basis on the same period last year and revenue in the UK, Greencore’s chief geographical market, was ahead 7.9%.

Greencore now controls 60% of the UK’s lucrative ‘food-to-go’ sector, meaning that six in every 10 wraps, salads and sandwiches eaten by consumers on the go are supplied by the Dublin-headquartered group.

In answer to a specific question, Mr Coveney said a British exit is a very realistic possibility and the politics of it are likely to be “very competitive and divisive”.

While he said Greencore’s board hasn’t quantified the consequences to the group’s bottom line of the UK voting, later this year, to leave the EU, Mr Coveney said labour and raw material costs would become more expensive and there would be a long period of political and economic uncertainty over what constitutes the UK, as a second referendum on Scottish independence could materialise.

Reported revenue growth from Greencore’s US operations, for the first quarter, amounted to 6.5%, but was 1.3% in constant currency terms.

The group is a chief supplier to Marks and Spencer and the Co-Operative Supermarket in the UK and to Starbucks and 7-Eleven in the US.

Management told shareholders there remains good growth opportunities in both place and that the scaling up of its US operations, in revenue and profitability terms, remains a priority.

In terms of outlook, management said that the year has started well and its investment in boosting capacity is “proceeding to plan”. 

“We remain confident in our ability to deliver performance in line with market expectations,” the group added.


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