Sector News

Hungry Greencore hunts for takeover targets

November 26, 2014
Food & Drink
Greencore has “very significant” firepower to pursue acquisitions that are in line with its focus on food-to-go products, chief executive Patrick Coveney has said.
 
Mr Coveney declined to say whether Greencore was interested in acquiring Kerry Group’s frozen foods division, with which it has been linked.
 
“The centre of our strategy is food-to-go products, and I think the best way to think about any acquisition activity that we might pursue is: ‘Is it consistent or not with a food-to-go-led strategy?'”
 
“We’re not going to comment on every potential opportunity in the food space when they come up.
 
“What I would say in relation to acquisitions is that we’re committed to delivering a food-to-go strategy, and if acquisition opportunities come up that are consistent us delivering that strategy, just as we always have, we’ll look at them.
 
“The big thing that we’re doing is we’re building more factories,” Mr Coveney said.
 
Yesterday the firm announced an 11.4pc increase in group operating profit in the last financial year, and said it would invest £20m in a new factory in Washington state in the US.
 
It’s also building factories in Jacksonville and Rhode Island in the US and Northampton in the UK.
 
“The impact of those four projects will dramatically increase the capacity and growth of our business as we go forward,” Mr Coveney said.
 
The company also announced a 6.4pc increase in group revenue and an 8.4pc increase in like-for-like revenue in convenience foods.
 
Nicola Mallard from Investec called the results “very strong”.
 
“The UK grocery market is pretty poor at the moment – so it proves that it’s not all bad news for UK food manufacturers.
 
“They’ve delivered not only strong revenue growth, but also margin improvements.
 
“I think people were assuming that the supply base would have been squeezed by the grocers who are struggling but that’s certainly not in evidence reading Greencore’s results today.”
 
Greencore has recently faced negative media coverage in the UK over alleged mistreatment of staff. Mr Coveney said the coverage has not accurately reflected the firm’s relationship with its employees.
 
“The characterisation of our relationship both in terms of how we recruit staff and how we engage in our staff that played out in the UK press in much of the last fortnight is not something that we recognise internally.”
 
Greencore is currently in negotiation with unions over wages at its factory in Hull.
 
“The status of our engagement with customers and our colleagues has been unaffected by the media coverage over the last fortnight and we’ve tested that pretty hard.
 
“We operate in a competitive industry and we pay competitively and one of the reasons that we get the performance that we do is through our people.”
 
Separately, DCC chief executive Tommy Breen told a gathering at Trinity College that DCC agreed to sell most of its food and beverage division because it was going to be difficult for it to take on larger brands.
 
He said having a market leading position is important to DCC.
 
By Gavin McLoughlin
 

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