Greencore to pay dividend after fall in profit

GREENCORE CHIEF executive Patrick Coveney, whose company has lost more than 80 per cent of its value in the past year, said it has no plans to cut its dividend in spite of acute pressure on its profits due to sterling’s weakness.

The company, whose British unit contributes 80 per cent of its operating profit, said in an interim management statement issued in advance of its agm yesterday that operating profits in the first four months of the year were in line with the same period last year.

“In the absence of a further decline in consumer demand, this is the path we expect to remain on for the full year, but with a more significant proportion of the full-year result from the seasonally more important second than in [2008],” the statement said.

“Conditions in the UK convenience foods market are as tough as we have seen, with consumers under pressure, which has translated into weakened demand for some of the group’s convenience food offerings in food-to-go. Despite these pressures, we recorded constant currency sales growth of 5.1 per cent in the first four months of [2009] in the convenience foods section.”

However, Greencore said its operating profit would drop by €8 million and its pretax profit would drop €6 million if the euro-sterling exchange rate stayed in the 88p to 90p bracket.

Following Greencore’s entry into the US market last year with the acquisition of Home Made Brand Foods and the Weight Watchers US licence for chilled foods, company chairman Ned Sullivan told the agm that the US market would be crucial for the company in the future. “As we go forward from here, we’d be looking to the United States for very significant growth.”

Mr Coveney said Greencore expected to double its US revenues every year for the next five years to the point at which its US sales would equal revenues it generates in Britain. This implied the achievement of annual sales of $750 million to $1 billion within that period, he said. The operations Greencore acquired last year in the US had significant additional capacity. While it may need to examine the possibility of a modest acquisition should the current growth of the operation continue, he said there were no plans at present to go down that road.

Speakers at the agm criticised the pension arrangements the company agreed with its former chief executive David Dilger, who received a €13.5 million lump sum last year in respect of his pension entitlements.

Shareholder Patrick Dineen, from Mallow, Co Cork, said some widows of Greencore staff had no pension entitlement as a result of an “oversight” in their scheme which cancelled their pension payments after five years.

“There are widows now of contentious workers who have no pension,” he said. “For anyone to walk away with a further €13.5 million from the pension fund to me is an injustice.”

Greencore said it had introduced significant enhancements to the management systems in its water unit following the discovery a €21 million fraud last year.