Greencore has reported a significant increase in its half-year results, despite the problems it has faced with the horsemeat contamination scandal.
Coveney acknowledged that the UK retail environment was a tough one
The convenience food manufacturer reported group revenues of £572.9M, up by 0 .9% for the 26 weeks ending March 29, delivering a group operating profit of £3.7M, up 6.3%. Convenience foods sales of £542.1M were up by 1.8%.
Greencore's chief executive Patrick Coveney said: "We have made good progress on our strategic agenda during the first half of the year, despite the fact that market conditions throughout the period proved very challenging.
"In the UK, we have completed the Uniq integration with the restructuring of the desserts business and the disposal of the Minsterley facility, and the integration of International Cuisine is progressing well. In the US, MarketFare and Schau have been integrated and, since the end of April, we are supplying Starbucks from four of our six facilities there."
Remained tough
Coveney, however, acknowledged that the UK retail environment remained tough, exacerbated in the second quarter by the horsemeat scandal, "which has temporarily driven the ready meals market lower", he said. In February, Greencore found itself caught up in the scandal when horsemeat was discovered in the company's own-label bolognaise sauce supplied to Asda.
Despite this, he expressed confidence in the group's ability to deliver adjusted earnings per share growth for the financial year "in line with expectations".
More than 200 tests were conducted for the presence of horsemeat on both Greencore finished products and ingredients. All tests were negative at the Food Standards Agency's 1% threshold, except one positive test carried out by Asda, which withdrew the product. Further investigation and testing found no evidence of contamination and the product was subsequently put back on shelf by Asda.
However, to protect against similar incidents across a broader range of potential contaminants, additional species screening procedures were introduced throughout Greencore's supply chain for beef-related ingredients.
Difficult market
The group's cakes and desserts activity includes the Hull facility, the foodservice desserts facility in Taunton and the chilled desserts facility in Evercreech. Over the past few years, cakes in particular have proved a difficult market for the company, but one that Coveney has said would remain a core area of activity.
Over the reporting period, the largest sub-category in which Greencore operates — celebration cakes — declined by 3.6%. However, its cheesecake sub-category continued to exhibit good growth.
Overall, cakes and desserts revenues were 2.9% lower on a like-for-like basis. The Hull facility experienced modest growth in the period and delivered stronger financial performance, according to the company.
