Greencore seeks to soothe markets as share price drops

Company ‘not aware of any developments’ that would cause share price to fall 8.6%

Greencore  said the integration of its US business was on track, “and we continue to be encouraged by the pipeline of commercial opportunities being explored with existing and new customers”.  Photograph: Cyril Byrne

Greencore said the integration of its US business was on track, “and we continue to be encouraged by the pipeline of commercial opportunities being explored with existing and new customers”. Photograph: Cyril Byrne

 

Convenience food producer Greencore has issued a statement in response to a 8.6 per cent drop in its share price since Wednesday morning.

Although the announcement soothed investor concerns initially on Thursday morning, the London-listed stock fell by over 4 per cent by 9am.

“The group is not aware of any developments since the release of its third-quarter trading statement on July 27th that changes the outlook contained in that statement,” the company said.

At the end of July the Dublin-headquartered company announced that revenue had increased 11.8 per cent in the three months to the end of June 2017 compared to the same period last year.

It attributed the increase to a strong performance in its UK “food-to-go” business. Greencore also said that acquisition of Peacock foods in the US had also helped growth.

On Thursday the group said the integration of its US business was on track, “and we continue to be encouraged by the pipeline of commercial opportunities being explored with existing and new customers”.

Greencore, which employs 16,000 people in 31 manufacturing facilities across the UK and the US, also noted that there has been “some level of churn in the legacy retail part of the US business”.

Fresh product offerings

“Specifically, it has decided to refocus its Jacksonville, Florida, site on fresh product offerings, and will withdraw from current frozen product production on that site. This change is being managed seamlessly with the relevant customers, and the board anticipates that the impact on profitability will be minimal,” the statement continued.

“Like many shareholders, executives are confused and frustrated with the weakness in the share price despite delivering solid operational performance year to date,” a Merrion Capital analyst wrote in a note to investors.

“We are not going to assume that something untoward is happening at Greencore because its share price has been under pressure but prefer to base our assumptions around recent updates, guidance and industry trends,” the analyst continued.

Analyst Jason Mollins told clients that Goodbodys stockbrokers near-term forecasts “are unlikely to change materially, albeit medium term profit growth may be nudged down slightly”.

Over the past month Greencore’s share price has fallen by as much as 14.05 per cent.