Sector News

Greencore to restructure US network as it warns on profits

March 13, 2018
Consumer Packaged Goods

Convenience food giant Greencore has issued a profit warning today as well as announcing that it plans to restructure its US network.

As part of the restructuring, CEO Patrick Coveney is to take a direct role in the strategic, organisational and commercial leadership of Greencore US.

Earnings per share at Greencore for the year are now expected to be between 14.7p-15.7p, with approximately two thirds of that contribution delivered in the second half of the year. This contrasts with current market expectations of earnings of 15.7p-16.6p.

In a trading update this morning the company said that the acquisition of Peacock Foods in 2016 had greatly enhanced the scale, operational capabilities and financial performance of Greencore US.

Since then the group has been actively seeking to align the manufacturing network with current and prospective commercial opportunities. However, in both its 2017 results and its trading update for the first quarter of 2018 Greencore had noted the continued low capacity utilisation at some of the original Greencore US sites.

“The group is now restructuring its US network to reflect the commercial pipeline and to address these utilisation challenges,” Greencore said.

As part of the restructuring, current fresh production at its Rhode Island facility will cease this month, with the facility being retained for potential repurposing. The facility represents approximately 4pc of the company’s US manufacturing.

Meanwhile at its Jacksonville site, the company said that it anticipates that new business wins will increase volumes and site utilisation in the latter half of this year. This follows an announcement from Greencore last August that it would repurpose the Jacksonville facility following the loss of a supply contract.

In addition, the group said it continues to make progress on its US commercial pipeline, most particularly with its current large Consumer Packaged Goods customers.

Along with Patrick Coveney’s increased involvement in the US – where he will now spend around half of his time – Chuck Metzger, COO of Greencore US, has assumed day-to-day responsibility for the US business and will report to Mr Coveney.

While Chris Kirke, outgoing CEO of Greencore US, is leaving the group to return to the UK.

“In the US, the core CPG business has continued to perform in line with expectations. The network and commercial developments announced in this update give the group confidence in improved financial performance through the second half of FY2018 and into FY2019,” Greencore said.

“However, the weak performance of the group’s underutilised original sites in the first half of FY2018, combined with the timing of new business contributions, and the current GBP/USD exchange rate, will reduce the expected rate of US profit growth in FY2018.”

By Ellie Donnelly

Source: Independent.ie

comments closed

Related News

March 24, 2024

Aldi’s new flat and stackable wine bottles “make light work of heavy shopping baskets”

Consumer Packaged Goods

Collaborating with Packamama, Aldi has rolled out the “UK’s first” supermarket own-brand flat wine bottles within its Chapter & Verse label. The recyclable ergonomic packaging concept is made from 100% recycled PET (rPET) and available for shiraz and chardonnay options.

March 24, 2024

Health, sustainability, and a taste for adventure drive snacking behaviors: Mondelēz State of Snacking report

Consumer Packaged Goods

For the fifth year in a row, global consumers expressed a preference for snacking over traditional meals, with six in 10 consumers saying they’d rather eat several small meals throughout the day than a few large ones, according to the fifth annual State of Snacking report from Mondelēz International. Nearly nine in 10 (88%) consumers snack daily.

March 24, 2024

Shareholders challenge Nestlé to increase sales of healthy foods

Consumer Packaged Goods

The shareholders are urging Nestlé to set a target to boost the proportion of its sales from healthier products amid concerns regarding regulatory, reputational and legal risks faced by the company, as well as the public health implications “associated with an over-reliance on less healthy foods”.

How can we help you?

We're easy to reach