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Greencore develops taste for Food on the Go

Greencore is reaping the rewards of an increased appetite for its on-the-go foods.

The Irish company recorded revenue of £356 million for the quarter to the end of December, an increase of 6.8 per cent on the same period last year, once currency fluctuations had been taken into account.

The increase was driven by particularly strong growth in the UK, where results were up by 7.9 per cent.
“In a challenging environment, revenue growth impressed in the UK, with the food-to-go segment driving divisional growth. US revenue growth was muted with product exits likely to have weighed. Management remains confident of delivering earnings per share within the range of market expectations,” Cathal Kenny, an analyst at Davy, said.

Liam Igoe, an analyst at Goodbody, said that the “strong set of results, particularly the performance in the UK, reinforces our positive view of the stock”.

He added: “Greencore is set for sustained earnings growth over the coming years, we estimate 12 per cent a year to 2018, with food-to-go driving growth on both sides of the Atlantic. The company remains one of our preferred stocks for 2016.”
Greencore specialises in producing chilled, frozen and ambient foods — the kind that can be stored at room temperature — and is the world’s largest sandwich maker. From 2010 to early 2014, it has expanded through increased sales and acquisitions. Over the past 18 months it has invested in increased capacity in both the US and the UK.

“While the overall UK grocery retail market remains challenging, our core chilled categories continue to perform well,” the company said in a trading statement. “Our strong growth was driven by the annualisation of prior year business wins together with the impact of new product launches.

“The business has had a good start to the year and our major investments in capacity and capability enhancement are proceeding to plan. We remain confident in our ability to deliver performance in line with market expectations.”
However, Patrick Coveney, the chief executive, also warned that an exit by Britain from the European Union would be damaging to the food industry in the UK.

The company announced yesterday that its new food manufacturing facility in Northampton was nearing completion and should be up and running in the spring.

In the US, the company reported revenue was 1.3 per cent higher in constant currency. It said that revenue was “in line with expectations” following the closure of its Brockton facility in November.

"Progress continues to be made on ramping up production capability in the Quonset, Rhode Island facility and the construction in  Seattle is progressing to plan,” it added. 

Source: - 27 January 2016