Greencore to exceed forecasts

Food group Greencore has said it expects earnings to exceed market expectations by about 5 per cent this year as a result of a modest increase in operating profit and a reduction in the group's tax charge.

In a preclose trading update yesterday - ahead of the end of the company's financial year on Friday - Greencore said the current market consensus was for adjusted earnings per share (eps) of 28.4 cent, inferring a likely outcome of 29.8 cent per share.

This compares with basic eps from continuing operations of 25 cent in the year to the end of September 2006.

Greencore said a strong second-half performance from its ingredients and related property division would "more than offset" the difficulties experienced by the convenience foods division.

The group said the ingredients and property side of the business was expected to report a significant increase in profit in the current financial year and was expected to remain in a healthy state into 2008.

The improved performance was attributed to the benefits of restructuring in the malt business, which supplies leading international brewers and distillers.

"We expect the excellent performance evident across this division to extend into full-year 2008," Greencore said.

Elsewhere, the convenience foods part of the business suffered as a result of unseasonal weather conditions in Britain and the failure to pass on raw material price increases.

Greencore said it expected these two issues to dampen the division's full-year operating profits by about 8 per cent when compared to the previous year.

"Market conditions remain challenging, with significant further input cost inflation anticipated," the company said, adding that it still expected to report good growth in the 2008 financial year as a result of tight cost management and the delivery of new commercial initiatives.

The group said it had made progress in the planning process for the development of its Mallow site and was awaiting feedback from Carlow County Council on its Carlow Gateway submission.

Greencore shares fell 2.5 per cent to close at €4.62 yesterday, in what was a weak market.