Greencore set to seek US acquisitions

Convenience food group Greencore is likely to seek further acquisitions and develop its own purpose-built facilities in the United States as it seeks to expand in that market, its shareholders heard yesterday.

In a statement issued ahead of its annual general meeting in Dublin, the group said sales in the US had risen 26.2 per cent in the 13 weeks to December 27th on the back of its deal to supply ready-made sandwiches to the Starbucks cafe empire.

Greencore posted revenues of £320.5 million in the 13-week period, an overall increase of 7.2 per cent over the same period at the end of 2012. On a like-for-like basis the company said revenue growth was 9 per cent.

Responding to questions from the shareholders at the meeting, chairman Gary Kennedy said the group would have to expand its presence in the US in order to keep serving the Seattle-based coffee-shop giant and the Irish group's other customer, convenience store chain, 7-Eleven.

“That may mean that we will have to acquire something or we may have to build,” Mr Kennedy said.

He said this was simply down to the size of the country and the need to have distribution centres relatively close to customers.

After the meeting, chief executive Patrick Coveney said Greencore's US operations needed to be within 400km of clients to which it is supplying fresh food.

He added that the group supplies about 20 per cent of what Starbucks and 7-Eleven require and is in a position to meet those demands through its existing presence in the US but would have to grow if it it wanted to reach more markets.

Distribution centres

Mr Coveney said

he expected that within three, four or five years it would begin building new distribution centres. “There will be some acquisition activity as well,” he said.

He and Mr Kennedy stressed that any acquisitions would have to be "the right fit" for the group. Greencore acquired two US businesses, Marketfare Foods and Schau, in 2012.

Meanwhile, the group is continuing to seek a buyer for its former manufacturing site at Littlehampton in Sussex in southern England.

Greencore’s property and good ingredients businesses combined generated less than 5 per cent of its overall revenue.

Mr Coveney said the group intended to sell the property only and remain in ingredients. It also holds the former Irish Sugar sites in Carlow and Mallow, Co Cork.

Greencore’s convenience foods division, which includes the production and sale of 345 million ready-made sandwiches a year, grew sales by 6.9 per cent to £305.6 million.

In the UK, like-for-like revenue was 7.2 per cent higher than during the same period in its previous financial year.

‘Well positioned

'
The group's statement said that it remains "well positioned as a focused and disciplined convenience foods business" in its chosen markets of the UK and US, noting that economic conditions in the UK we

re steadily improving.

“Greencore has had a good start to the year and we remain confident in our ability to deliver financial performance for the year in line with market expectations,” the statement said.

The group’s financial year ends on September 27th.

LOWEST SUPPORT: 28 per cent oppose re-election of non-executive
Long-standing Greencore non-executive director John Herlihy commanded just 72 per cent of the vote when he went up for re-election at the food group's annual general meeting yesterday, far fewer than any of his boardroom colleagues, many of whom had close to 100 per cent support.

The vote for Mr Herlihy was split 72 per cent for and 28 per cent against when he presented himself for re-election at the meeting yesterday. The next lowest was chief executive Patrick Coveney whose re-election was backed by 96.5 per cent of the vote.

All the others, including comparative newcomer Sly Bailey, whom the board appointed as a non-executive last May, received more than 99 per cent support yesterday, which was the first time that her position was put to a vote of Greencore’s shareholders.

Mr Herlihy has served on the Greencore board since March 2009. He is head of Google Ireland and vice-president of the internet giant’s advertiser operations. He has held senior management roles in other technology groups including Oracle and First Data.