Convenience food group Greencore expects inflation pressures to ease to 2-3% next year

Dublin-headquartered convenience food group Greencore increased its revenues and profits last year as it managed to largely pass through price inflation, its full-year results show.

Group revenue rose by 10 per cent to £1.9 billion (€2.2 billion) while its pretax profit increased by 13.6 per cent to £45.2 million for the year to the end of September 29th.

Greencore said the revenue growth came through a combination of underlying volume growth, including net new business wins and recovering significant levels of inflation. Manufactured volume growth of 0.5 per cent represented a “strong” performance, relative to the wider market, it said.

Revenue in its food-to-go categories (comprising sandwiches, salads, sushi and chilled snacking) totalled £1.25 billion and accounted for about 65 per cent of reported revenue. The company is the world’s biggest sandwich maker.

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Revenue from chilled-ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles and frozen Yorkshire Pudding categories increased by 14.3 per cent to £661 million in the year.

Greencore chief executive Dalton Philips said the business had to deal with £230 million of price inflation during the year, which was either passed on to customers or resulted in cost savings being introduced in the business.

“We passed on essentially all of it, working with retail customers in terms of product reformulation, reducing ranges, or trying to be more productive for them,” he said.

The Irish executive also noted that Greencore had completed a major restructuring of the business, taking out 350 management roles (15 per cent of the total) and reducing the number of business units from five to one. “We’ve got one chief operating officer now, one commercial officer, they’ve been really focused on reducing our cost base to mitigate inflation.”

Mr Philips said inflation had run in low double-digit levels last year and he was “hopeful” that it would ease to 2-3 per cent this year. “It’s led to some difficult conversations with retailers and we’ve had to pay for it in our margin, 4 per cent compared to what it used to be. But equally, consumers have had to pay for it, too.”

In terms of challenges, Mr Philips said: “In the short term volumes are still tight. Volume is hard to come by. Inflation has come down but there’s a big increase in the national living wage in the UK.”

He said the group was focused on improving profitability and investing in a number of initiatives to grow the business.

“We are pleased with the start to the year and although it’s early days, the group remains confident in delivering FY24 within the range of current market expectations,” he said.

Greencore sold the last of its trading businesses in the Republic during the year – the edible oils trading business Trilby Trading Ltd (annual turnover of about €100 million). “We are not producing anything in Ireland at the moment,” he said.

The group is also in the process of selling off former Irish Sugar sites in Mallow, Co Cork and near Carlow town.