Greencore moves to eliminate costs as coronavirus bites

Convenience food giant noted reduction in demand in food-to-go category

Greencore chief executive Patrick Coveney. Photograph: Dara Mac Donaill/The Irish Times

Greencore chief executive Patrick Coveney. Photograph: Dara Mac Donaill/The Irish Times

 

Convenience food giant Greencore has suspended financial guidance for this year and moved to eliminate non-essential operating costs after seeing a “marked reduction” in demand for some of its products.

The company is tightening up on production costs and putting an undeclared number of staff on leave.

The UK’s largest sandwich maker said consumer demand and shopping behaviours have changed rapidly since the UK government announced measures to combat the Covid-19 outbreak.

As a result, the Irish-headquartered company noted a reduction in demand for its food-to-go categories in grocery retail, which have been partly offset by growth in other categories, it said.

Greencore, which is the biggest sandwich maker in the UK market, has moved to eliminate its non-essential costs while the board have agreed to take a 30 per cent reduction in fees and base salaries for three months. The wider group leadership team taking a 20 per cent reduction in base salary for the same period.

Suspending the financial guidance, the company said the outlook included in its trading statement for 2019 should “no longer be considered current”.

Expenditure

Greencore said it would defer a substantial portion of previously planned capital expenditure, and would not be proceeding with an interim dividend payment.

“Overall, the group retains substantial and increased financial headroom, with cash and undrawn committed bank facilities of approximately £265 million (€296 million) at March 27th, 2020. This includes a newly agreed additional £75 million committed debt facility which matures in March 2021,” the company said in a trading statement on Monday.

“While the duration and impact of this pandemic remains uncertain, all of our stakeholders are continuing to work together to protect the business,” the company, which supplies a range of products including sandwiches, salads, sushi, and chilled ready meals, said.

Greencore has also implemented enhanced safety measures such as social distancing initiatives to support its staff during the coronavirus pandemic.