Irish convenience food group Greencore needs to work harder to build shareholder confidence, in particular around its growth potential in the US as it tries to steady a volatile share price, the company’s CEO said.
Patrick Coveney, speaking at the group’s AGM yesterday said that “we have work to do this year to build confidence amongst our shareholder base that the US will deliver as the board expects,” according to the Irish Examiner.
In the past year, the Dublin-based group’s share price has dropped by almost 7% and in spite of a strong trading update published yesterday and the disposal of the last remnants of its underperforming cakes and desserts business, Greencore shares further dropped in the last week with an almost 5% decrease in the last two days.
Currency fluctuations, uncertain customer relations in the US, short-selling of the Greencore stock by hedge funds and profit warnings from peer groups have all wreaked havoc on the company over the past 12 months.
Coveney said that while investors could benefit from management being more vocal and transparent on the nature of b2b contracts, such openness might damage customer relations.
He told shareholders earlier that he was “tremendously excited” about the potential of the entire business, while saying that “we know this year needs to be one of delivery, and I think it will be”.
Greencore showed total US revenue growth of 297% to £255.1 million (€290.2 million) in the first quarter trading update, which covers the three months to December 31st 2017.
This was fuelled by the company’s €700 million acquisition of Peacock Foods, which substantially upscaled the company’s US manufacturing capacity. The company’s like-for-like sales were still up 5.1%.
Greencore anticipates a one-off, non-cash credit of about $28 million to its first-half income statement of 2018, due to a US corporate tax rate reduction, with future earnings benefits resulting from the US division.
In its core UK convenience food division, the company also reported a 9.2% revenue growth. Revenue rose 53.6% to £640 million in the 13 weeks to 29 December 2017.
The group’s management said it expects a strong year of growth and enhanced profitability, cash flow, and returns in the medium term.
At yesterday’s meeting, 84% of the company’s shareholders voted in favour of its tweaked executive pay policy, up from 60% 12 months ago.
Last year, Greencore’s profits plunged by more than 74% due to higher than expected restructuring costs and acquisition expenses.
© 2018 - Checkout Magazine by Kevin Duggan