Greencore to ‘consider’ half-year dividend

Greencore will “consider” paying a dividend at its half-year stage, chairman designate Leslie Van de Walle told the sandwich and convenience food-maker’s shareholders on Thursday.

The group warned of a “difficult” market before its annual general meeting in Dublin, forecasting results at the lower end of market expectations in 2023.

Shareholders at the meeting criticised Greencore’s failure to pay dividends for three years, with some arguing that its current stock buy-back programme was damaging the group’s value.

Mr Van de Walle acknowledged that the company should have a dividend policy. “And now that the business is more stable it’s something that the board will consider but it will not be until the half year that we make a decision.”

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However, he disputed that share buy-backs had prompted a 25 per cent fall in its stock price since 2019. “The reason the shares are down is that first, our results and profits are 25 per cent lower than they used to be, and second, markets are very volatile.”

Emma Hynes, chief financial officer, noted that some shareholders agreed that the buy-back was the right approach at this point in time.

Shareholder Neil Duggan said Greencore’s annual report indicated that the board did not favour paying dividends. He proposed that the board consider paying a 2 pence sterling a share at the half-year stage. “It’s a pittance but we’re getting nothing at this stage.”

Irish-based, London-listed Greencore will reach the halfway mark in its financial year on March 31st, and will report interim results at the end of May.

Speaking after the meeting, Dalton Philips, chief executive, said management would look “across the whole supply chain” for savings to combat inflation. “I want to look at what we buy, what we make, how we make it and how we sell it.” He agreed that staffing could be a component of this, but did not confirm that job cuts would feature in any plan to cut costs.

Mr Philips said that Greencore faced challenges passing on higher costs to the retailers that sell its products. He noted that in some cases the group has stopped supplying customers which were not prepared to pay the prices at which it was prepared to sell. “In fact we’ve just done that with a very large customer,” he added.

In a statement Greencore said revenues rose 19 per cent in its first quarter, but growth was driven by rising prices rather than volumes. The group, which focuses on the UK market, said revenue for the 13 weeks to December 30th, 2022, was £463 million (€525m). Volumes were “modestly” behind year-on-year, Greencore said.

In the “food to go” category revenue rose 14.5 per cent to £291.1 million on lower volumes, as railway strikes in the quarter hit the demand for sushis and salads.

Greencore also recorded lower volumes in the distribution of third-party products, which were down 10 per cent year-on-year. Its other convenience sector saw reported revenue up almost 28 per cent to £171.9 million, with strong volumes from its ready meals business.

Lower volumes and a lag in recovery of inflation over the final months of 2022 also led to profit conversion that was behind management expectations, with the group pledging to immediately implement further measures to tackle this, focusing on contract margin enhancement and delivery of its operational excellence programme.

Mr Philips said the market was difficult and volatile, with the business getting off to a slower start to the year than envisaged. However, the new chief executive, who stepped into the role four months ago, said he remained “highly enthusiastic” about the group’s longer-term future.