Greencore revenue increases by 50% following acquisition

FOOD COMPANY Greencore posted a strong set of interim results yesterday, in the first major trading update since the acquisition of British company Uniq last year.

Results for the six months ended March 30th, 2012 show revenue at Greencore increased by 50 per cent during the period to £567.7 million, mainly as a result of the Uniq acquisition.

Greencore’s underlying revenue was up by 9.3 per cent, with its convenience foods division ahead by 9.7 per cent. Operating profit at the company, which supplies sandwiches, ready meals and other consumer food products to retailers mainly in the UK, jumped by 37.6 per cent in the first half to £30.7 million.

Adjusted earnings per share was almost 20 per cent higher at 5.5 pence, reflecting the impact of a reduced tax cost connected with the Uniq acquisition.

As expected, margins were 50 basis points lower at 5.6 per cent, reflecting the lower-margin nature of the Uniq business.

The results were well ahead of virtually all analysts’ forecasts, boosted by a strong performance by Greencore’s main convenience foods business. Despite the consumer downturn, Greencore’s underlying foods division grew by almost 10 per cent last year, ahead of the overall market.

Some 7.5 per cent of this growth was due to volume increases with the remainder reflecting price increases.

Chief executive Patrick Coveney said Greencore had increased its market share during the period by adding new retail customers as well as increasing the range and type of products it supplies to these customers.

For example, having signed a new contract with Waitrose last year, Greencore developed its relationship with the supermarket during the second half of last year and now supplies 40 per cent of Waitrose’s sandwiches.

“We are also operating in a part of the market that is growing well: there is good category momentum in sandwiches, ready meals and cooking sauces,” he said.

The integration of Uniq is progressing well, he said, with its Northampton sandwich business seeing “good revenue progression”. The major restructuring of Uniq’s dessert business, which commenced before Greencore’s acquisition of the company and involves the winding down of some product lines and the transfer of production between sites, was also continuing as planned, he said.

During the first six months of the year, revenue from Greencore’s US business increased by 14.3 per cent as a result of the acquisition of US business On-A-Roll in December 2010.

Subsequently, Greencore announced the acquisition of US convenience food company MarketFare last month for $36 million (€27.4 million). Mr Coveney said the acquisition offers capacity of $200-$250 million in revenue. Last year, revenue from Greencore’s US business and MarketFare was about $160 million.