Greencore revenue rises as convenience plan drives growth

Momentum from its investments in the food-to-go sector in both the US and the UK helped Dublin-based food group Greencore drive growth in revenues and operating profits in the year ended September 25th.

Group revenue rose 5.2 per cent to £1.34 billion (€1.9 billion), with convenience food revenue up 6 per cent on a like for like basis to £1.29 billion.

The company’s operating profit increased by 10.6 per cent to £91.7 million, with adjusted earnings per share growing in double digits for the fifth year in a row, at 13.2 per cent.

Its after-tax profit increased to £59 million from £48.6 million while the dividend per share for the full year rose to 6.15 pence from 5.45 pence in full year 2014.

Like-for-like sales in the food-to-go sector in the US rose by 15.4 per cent and in the UK by 8.9 per cent. In the UK, sales of prepared meals rose by 1.8 per cent but grocery was down 1 per cent. Revenues from convenience foods rose by 6 per cent.

Revenues from its ingredients and property division, which represents less than 5 per cent of group activity, declined by 16.6 per cent to £50.1 million, driven by lower commodity prices in edible oils.

"Greencore has had another strong year and our clear food to go led strategy has continued to drive growth in both the UK and US markets," chief executive Patrick Coveney said in a statement. " We increased our investment in major capacity and capability improvement projects during the year, in each case underpinned by long term customer relationships.

Among the developments during the year were the completion of the first phase of its extension to its Northampton facility, and the second phase had already begun, due to begin production in spring. The company said there would be further investment in the campus.

In the US, a new build in Rhode Island is coming on stream, Greencore said, with work due to start on another in Seattle. The company expects to spend £100 million this year on capital expenditure.

Mr Coveney told The Irish Times that he was confident that Greencore was on the right side of the debate about obesity, noting that 60 per cent of its sales are in food out-of-the-home, such as sandwiches, sushi and salads. It also produces sauces and other items designed to help people cooking at home while its ready meals include "fresh ingredients, sourced locally".

Greencore also published its annual report showing that Mr Coveney’s remuneration rose to £3.32 million in full year 2015 compared with £2.13 million a year earlier. His basic salary declined to £581,000 from £625,000 while his cash bonus reduced to £318,000 from £462,000. These declines reflected, in part , currency movements with Mr Coveney’s pay denominated in euro.

However, the value of his long-term incentives increased to £1.85 million in the 12 months to the end of September compared with £302,000 in the previous year.

The accounts also show that Mr Coveney would earn a salary of €788,000 from October 1st 2015, representing an increase of 1 per cent, and receive a pension payment of €296,000.

In terms of share awards, Mr Coveney was granted 219,510 shares in December 2014 with a face value of €618,432 based on a performance period out to September 2017. In addition, Mr Coveney received 158,176 deferred bonus shares last December with a face value of £445,634.

While Greencore’s trading focus is firmly on the US and UK markets and its stock market listing is in London, it continues to have strong connections with Ireland, where the company was founded in 1991 after the State privatised Irish Sugar.

Mr Coveney said Greencore generates about €70 million in revenue annually from Ireland through a combination of sales from its ingredients business based here, and products it manufactures in the UK and sells in this country through Tesco and Marks & Spencer.

He said Greencore also has its corporate head office in Dublin with about 55 staff and it purchases £100 million worth of Irish dairy and proteins each year.

In addition, it owns properties in Athy, Carlow and Mallow that are a legacy of its former Irish Sugar subsidiary. “We are working through plans for these sites,” Mr Coveney said, adding that Greencore has no wish to be a property developer.