Greencore expects to increase profit on better UK sentiment

IRISH FOOD group Greencore has received a boost from improved consumer sentiment in Britain and said it expects to report an operating profit for the year to September ahead of 2008.

The supplier of sandwiches to supermarkets, garage forecourts and airlines said yesterday it was on target to meet market expectations of 16.4 cent in adjusted earnings per share, down from 24 cent last year.

“The UK environment remains challenging, although there has been a slight improvement in consumer sentiment in recent months,” it said, adding that sterling weakness against the euro would affect profits.

Revenues from convenience foods were up 2.5 per cent in the four months to July to €278 million, compared with the same period last year.

In the UK, sales were up 1.8 per cent on a like-for-like basis and Greencore said it had reduced costs in its convenience foods unit there by 20 basis points.

The company said its UK chilled foods volumes rose by 4.4 per cent over the period, while its US convenience foods division recorded a 43 per cent growth in underlying sales growth year-on-year.

The company is trialling pre-packaged sandwiches in two US retailers and said it plans to convert a number of its “made-in-store” offerings over the coming months.

“Continental European sales were behind by 9 per cent reflecting a weaker consumer environment in the Netherlands,” it said.

The company said trading for the first 10 months of its year had held up well in “challenging conditions”, with group operating profit ahead of the same period last year on a constant currency basis.

Greencore shares closed down 3.5 per cent at €1.39, more as a result of profit-taking, according to Dublin brokers, than in response to its interim statement.

Troubled property developer Liam Carroll holds a stake of just under 30 per cent in Greencore and the stock had enjoyed gains of over 20 per cent over the last week, in part due to speculation he may have to dispose of his holding.