FDBusiness.com

Greencore, the international convenience food group, has reported an 8.1% rise in group revenue to £691.6 million and an 8.5% increase in operating profit to £43.5 million for the 26 weeks ended 25 March 2016 as the operating margin at 6.3% remained unchanged from the prior year. Greencore’s focus on growing its leadership of the food to go segment in the UK and US continues to bear fruit with strong like for like revenue growth of 12.7%, well ahead of market performance, in the first half of 2016. Revenue from Greencore’s Convenience Foods business was £667.9 million, up 7.8% on a constant currency basis.

Over the last two years, Greencore has significantly increased capital expenditure on manufacturing capacity to support the double digit growth profile of its food to go activity. The group is also investing in its IT and distribution infrastructure, as well as in enhancing its leadership capability both to sustain excellent customer service and to develop a resilient and scalable model for the future.

Patrick Coveney, chief executive of Greencore.

In the UK, where its food to go business grew by 13.1% in the first half, Greencore has completed the construction of Unit D on its Northampton campus with the first of the four production cells now in production. Good progress has also been made on the construction of the additional unit which is due to be commissioned in spring 2017. Greencore has also decided to add several new production lines at its other UK sandwich facilities to ensure its ability to meet both growing demand and future new business wins.

In addition to the investment in production capacity to meet confirmed volume growth, Greencore is investing in its distribution and IT infrastructure. In the last 12 months, it has moved its principal northern and southern food to go picking and distribution hubs to larger facilities and, in so doing, introduced more automated processes. This has enabled the business to take on additional distribution volumes during the first half of 2016. Indeed, Greencore is now distributing directly over four million units per week, almost double the level distributed in its 2015 financial year. The group is also investing heavily in its core IT infrastructure and its ERP solutions to build a scalable, resilient platform to support future performance and growth.

Greencore has made good progress during the first half in the US. The Quonset, Rhode Island facility, which began production in towards the end of 2015, has now been fully commissioned. Construction of a new facility in Seattle is nearing completion, with the site due to begin production from June onwards. Constant currency revenue growth of 11.5% was driven by strong performance with key customers. While the US business made a modest loss in the first half, principally due to the high level of start-up costs in Rhode Island, it is expected to be profitable in the second half.

“Greencore has performed strongly in the first half of the year,” remarks Patrick Coveney, chief executive of Greencore. “Our strategy of focusing on the UK and US food to go markets is working well and we are continuing to invest in capacity and capability initiatives to support the substantial future growth pipeline. We are confident of further progress in the months and years ahead.”