Greencore’s challenging six months will not impinge the long-term prognosis, the own-label ready meals and convenience manufacturer said.

Speaking to the Grocer this morning, chief financial officer CFO Alan Williams admitted that there had been a “marked slowdown” in its chilled convenience operation, with last year’s market growth of 5% in value term being followed by more “moderate” growth of 1.8% in the first half of this financial year.

This he attributed to a combination of factors – clearly the horsemeat scandal played a hefty part in denting consumer confidence - but he also cited the coldest March in fifty years and the continued pressure on consumers’ disposable incomes. However he was upbeat by saying he didn’t think this slower growth was a permanent issue.

The convenience category will continue to grow faster than overall supermarket in the US and UK, he argued and the company is well placed to capitalise on this. “We can continue to grow faster than the overall food market in the UK as a result of the category exposures we have and though we’ve had a difficult six months in revenue terms, we don’t see anything changing the long term prognosis of this long-term trend,” he explained.

He said that the company was in best shape it could be to weather the conditions, having taken steps to reduce its risk exposure. Although around 80%- 85% of the company’s revenues are derived from the six biggest UK retailers, he said Greencore had lessened its exposure to this tough marketplace by matching its share to the respective revenues of the retailers within chilled and convenience food, as well as continuing to develop alternative channels, including convenience, wholesaler and the discounters, and expanding its US operations.

Overall input cost inflation rose less steeply than last year he said, up 2% compared to 5% last year, which had helped the cakes and desserts business in particular. This was in “better shape” than it had been 12 months ago due to improved efficiencies at the Hull facility, he added, although the category was still not making “much” money, well below the group’s average, and required more work.

Other successes this year have been outside the UK, he said, with a major contract with Starbucks in the US.

“We need to prove our worth and the innovation we can bring to Starbucks in the US, but we hope to win more business with them,” he said. “We don’t supply the UK business, but we’d be happy to talk to them in the future when the current arrangement comes under review.”

Topics