Purchase of Peacock Foods hailed as "transformational"
Greencore, the Irish-headquartered, publicly-quoted convenience food producer, has published its first half-year results since the self-described "transformational" $745.5 million (€694.8m) purchase of Peacock Foods.
The group posted revenue growth of 46% to £1.01 billion for the six months to the end of March, while group operating profits rose 27% to £55.3m.
Revenue in the UK and Ireland was up 16.1% to £685.7m, while its US business saw a massive 220.8% spike to revenue of £324.6m.
In the UK and Ireland, operating margins fell slightly – expected as the group invests in plant and employees to service new longer term sandwich, pizza and other convenience food contracts with the likes of M&S, Sainsbury and Asda.
The group has said it was able to offset a 4% increase in direct labour costs during the period.
Chief executive officer Patrick Coveney said of the results:
“This has been a transformational period for Greencore following the acquisition and integration of Peacock Foods in the US. Against a backdrop of considerable change across the Group, we are pleased to be reporting strong revenue and profit growth for the first half of the year.
"In the UK, we have delivered significant expansion and investment following recent new long-term business wins, as our Food to Go business continues to grow rapidly.
"In the US, the addition of Peacock Foods has transformed our market and channel position and has given us a growth platform of real scale.
"The enhanced capabilities, product offerings, and customer relationships that have been added to the Group in a short space of time, combined with the strength of our underlying business, mean that we are confident of making further progress in FY17 and beyond."
Greencore’s share price dipped recently when it emerged that one of the recent giant acquisition, Peacock Foods largest customers, Tyson, had acquired a business itself that might impact on its long-term contracts with Peacock.
Greencore CEO Patrick Coveney. greencore.com
Coveney told Breakfast Business this morning that while he "can't speak to what does or doesn't happen" to the share price, he was "completely satisfied that there are no negative implications for Greencore associated with that transaction."
Speaking to the show late last year, Coveney explained how there were many reasons, despite the international expansion, why it still made sense for Greencore's headquarters to remain on Irish soil.
"Dublin is actually a really well-connected location to run an international food company from. So I can fly to 15 or 16 different regional airports in the UK [and] get very quickly to Boston, Chicago and New York for our US business.
"We also have a wide set of the advisory set – the people who lend us money, some of our shareholders – who are located here. Our UK customers [and] our US customers very much value the Irish food heritage."