Greencore sales increase 6.5%

Greencore has reported solid sales growth of 6.5 per cent within its central convenience food division for the first quarter and presented shareholders with a confident outlook for the year ahead.

The company has warned of harsh input cost pressures however, admitting that spiralling inflation was forcing it to raise its prices.

Addressing the food group's annual general meeting in Dublin yesterday, Greencore chairman Mr Ned Sullivan said the company's UK convenience food division would spend some €350 million on raw materials in the current financial year, with inflation in those markets standing at an average of more than 5 per cent.

Inflation within the chicken market, for example, is running well into double digits, partly as a result of the current outbreak of Bird Flu.

Mr Sullivan said that every convenience food business within the group was working hard to offset the cost pressures through initiatives such as product reformulation and supply chain changes.

He said the benefit of raising prices would be more pronounced in the second half because of the "inevitable lag" in the recovery of cost inflation.

Mr Sullivan told shareholders that their company was in a strong position "both commercially and financially".

"Greencore is now well positioned to reap the future benefits of its past actions," he said.

The chairman declined to comment on reports that the firm was in talks to sell its troubled UK bread business but he did acknowledge that the market was tough.

He said the company had taken decisive action to take costs out of the bread operation in 2003 and had made further progress on the matter this year.

"There are plans in place to address issues that affect it," Mr Sullivan said in response to one of just two shareholder questions at the otherwise quiet annual general meeting.

Speaking to reporters after the meeting, Mr Sullivan shied away from discussion of the takeover rumours that surrounded Greencore towards the end of last year.

"We never comment on rumours or speculation," he said, going on to affirm the company's commitment to independence.

"We don't need a merger, takeover or major acquisition to implement our growth strategy," Mr Sullivan said.

Shares in Greencore fell four cents to €3.29 yesterday.