Master of reinvention Greencore fattens up portfolio

A bold strategy to reshape what was once a sugar business is paying off

A “breakthrough year” was how Greencore described its 2012 performance yesterday. Make that three. The last few years have been transformative for a company that has experienced its fair share of corporate activity and strategic shifts.

A frustrated plan to merge with British company Northern Foods was quickly followed by the purchase of UK rival Uniq in 2011 and the decision to move its listing to the UK.

This year the company, somewhat surprisingly, upped its presence in the US, purchasing two convenience food companies.

The bold strategy appears to have paid off. Yesterday the food company posted a 7.7 per cent increase in underlying revenue – ahead of the food industry average of 3.1 per cent growth and 5 per cent growth in the chilled prepared-food market.

Operating profits rose 37.3 per cent to £70.7 million. Impressive stuff in a challenging consumer climate.

Much of the company’s growth is down to the successful acquisition and integration of Uniq. The purchase of the sandwich maker, which involved the decision to offload its loss-making desserts business, has consolidated Greencore’s leading position in the UK convenience food market. It is now the biggest player in the “food to go” category in the UK, with overall revenues of nearly £1. 2 billion, supplying major retailers and supermarkets including Waitrose, Tesco, Asda, Sainsbury’s and Marks Spencer.

While the Uniq acquisition was a defining deal for Greencore this year, the company’s penetration of the US market could be the key strategic development in the coming years.

Although the US only accounts for about 10 per cent of Greencore’s revenue, the company aims to build scale over the next few years. With six separate sites in the US, it aims to build manufacturing capacity and continue to focus on small store channels. Its partnership with Starbucks, announced yesterday, is a positive sign.

While input costs and intense promotional activity continue to present challenges, Greencore has successfully weathered the storm this year. For a company that has been the master of reinvention – successfully reshaping itself from what once was exclusively a sugar business – a few more reinventions may just be in store as Greencore enters the next stage of its development.