Convenience foods giant Greencore has posted a 70-basis-point decline in adjusted operating margin in the first half of its financial year, following challenges in its US division.
Group revenue was up 22.6%, to £1.24 billion, however, with adjusted EBITDA rising by 9.4% and adjusted operating profit growing by 8.0%.
“The first half of FY18 has been challenging for Greencore and its shareholders,” said Patrick Coveney, Greencore's chief executive.
“While we delivered strong revenue growth in both the UK and US, profit growth was impacted by the challenges experienced in the original part of Greencore’s US division. As a result of the significant strategic, network and organisational measures that we have taken in order to address these challenges, we believe that our US business is now much better positioned to deliver an improved performance in the second half of the year and beyond.
“We anticipate strong organic growth for the remainder of FY18,” Coveney added.
Divisional Performance
In its UK & Ireland business, Greencore noted that the period saw it 'deepen [its] leadership position in the food-to-go category', with a further expansion of its sole supply partnership model and an extension to contractual agreements.
The period also saw the introduction of a new 'operational effectiveness' programme, as well as the disposal of the UK cakes and desserts business, marking its exit from this sector.
In the US, the group announced a 'refined and refocused' strategy, aiming to improve operational performance and better capitalise on growth opportunities.
The period saw it enhance its US leadership team, with CEO Coveney taking more of a direct role in US operations and the ceasing of production at the group's facility in Rhode Island – one of its first production plants stateside. The group hopes to divest this facility 'in due course'.
In terms of the year ahead, Greencore 'anticipates good organic growth in the seasonally more significant second half of the financial year. UK profit conversion will be driven by strong year-on-year performance in food to go.'
It added that profitability in its US division will be 'supported by strong year-on-year performance in the former Peacock Foods business'.
© 2018 European Supermarket Magazine – your source for the latest retail news. Article by Stephen Wynne-Jones. Click subscribe to sign up to ESM: European Supermarket Magazine.
