Greencore hit by supermarket competition
Food group Greencore, which last year bought ready meals firm Hazlewood, showed it was being hit by the intense supermarket competition today.
Price pressure in the value bread market meant the results of its UK bakery operation Kears would fall ‘‘well below’’ expectations in the full-year.
Difficult market conditions would also impact the performance of its tinned and packaged grocery business, already hit by delays in opening a new cake plant in Hull.
Both Tesco and Sainsbury have unveiled £100m-worth of price cuts in recent days as the grocers battle for market share.
Greencore chief executive David Dilger said trading conditions were ‘‘far from easy’’ with margin pressure in many of the group’s businesses.
He said, however, the performance of Hazlewood’s chilled foods was encouraging and the restructuring of the company was progressing to plan.
Production at Hazlewood’s bottled sauces plant in Manchester had now been transferred to Selby in Yorkshire while a series of disposals had been made.
Greencore’s horticultural businesses and an Irish fats and edible oils operation have been sold in recent months.
These sales have raised €40m (£25m) and Greencore said other disposals were planned by next May.
Greencore bought Hazlewood in November last year for £258m saying it wanted to reinvest cash from its commodity sugar and flour business into the convenience foods sector.
In June, it reported a 32% rise in half-year profits to £28m despite the foot and mouth crisis wiping £1m off Hazlewood’s business.
Greencore’s shares slipped 10p to a new low of 142½p after the pre-close statement, a drop of 7%.
Liam Igoe, food analyst at Goodbody’s in Dublin, said the market was concerned about the impact of price pressure on Kears.
‘‘Margins had been under pressure in the first-half and the situation seems to have got worse in the second-half,’’ he said.
Mr Igoe is cutting back his full-year profit forecast from €117m (£73.1m) to €111m (£69.4m).
