Greencore's third quarter (Q3) results tell a tale of two regions, with strong progress in the US offsetting declines in its UK home market.
Greencore's product mix includes a range of prepared meals
Italian ready meals, poor weather and the horsemeat effect had taken their toll on UK performance, the convenience foods manufacturer claimed.
"Market conditions in the UK remained tough during Q3, with continued poor weather affecting the business for much of the period," the company said in a statement.
"Whilst the overall chilled ready meals market is gradually recovering from the impact of the horsemeat scandal earlier in the year, Italian ready meals remained in year-on-year decline affecting the Prepared Meals division."
In the UK, revenue was 1.3% lower than the prior year on a like-for-like basis, excluding the acquisition of the International Cuisine business in August 2012 and the sell-off and exit from Uniq desserts activities, Greencore said.
As a consequence, it said it continued to maintain pressure on initiatives to improve operations and control costs.
US up more than 50%
By contrast, revenue in the US was up by more than 50% on the same period last year, it said.
"This growth reflects the impact of the acquisitions of MarketFare Foods and Schau, both of which are performing well, together with the commencement of food to go supply to Starbucks," it stated. "This supply agreement is now fully live across the four sites envisaged."
Investec analyst Nicola Mallard described Greencore's UK revenues as "sluggish". Results in the UK were similar to half year figures for the firm, she stated in a note.
"This continues to reflect unhelpful weather through the quarter (the period closed prior to the warm weather) and some ongoing impact from the horsemeat issue, especially in the Italian meal category."
Positive effect
However, she expected better weather in July to have a positive effect on fourth quarter figures.
Panmure Gordon analyst and director Damian McNeela similarly concluded that "the horsemeat issue continues to act as a drag on UK convenience growth but a strong performance from the US and on-going efficiency improvements should allow the company to deliver on current year expectations".
Greencore Group recorded revenue of £305.8M in the 13 weeks to 28 June 2013, an increase of 2.6% on the prior year. The Convenience Foods division recorded revenue of £285.7M, 2.8% higher than the prior year.
In the 39 weeks to 28 June 2013, it chalked up revenue of £878.7M, 1.5% ahead of the prior year. The Convenience Foods division recorded revenue of £827.8M year-to-date, 2.1% higher than the prior year.
