Published: Thu, March 15, 2018
People | By Leon Thompson

Greencore plans to stir up USA division

Greencore plans to stir up USA division

Convenience food maker Greencore - whose brands include Bisto yorkshire puddings, Munch sandwiches, and Bistro To Go sandwiches and salads - bought US-based Peacock Foods in December 2016, which it said greatly enhanced its scale, operational capabilities, and financial performance in the country.

Chief executive Coveney (pictured left) is to spend around half his time in the US, taking a direct role in the strategic, organisational and commercial leadership of Greencore US.

Yesterday Greencore said that it expected its full-year adjusted earnings per share to range from between 14.7p and 15.7p, down between 15.7p and 16.6p a share.

The profit warning came alongside a hefty United States restructuring, in order to match the capacity the company has to its commercial pipeline. "Since then the group has been actively seeking to align the manufacturing network of approximately 2.5m square feet with current and prospective commercial opportunities".

The company now plans to cease production at its loss-making Rhode Island facility, which makes up about 4 per cent of its United States manufacturing footprint, from March 25th.

But it had been grappling with "continued low capacity utilisation" at some of the original Greencore US sites.

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The factory represented approximately 4% of the group's United States manufacturing footprint and 2% of its pro forma revenue in 2017.

It is now restructuring the U.S. network to better reflect the commercial pipeline and try and tackle the capacity problem.

Plans are well advanced which, if successful, would secure significant new business at several sites in the Midwest region. In Jacksonville, utilisation has been low in the first half of Greencore's financial year, which ends September 29, but it expects volumes to increase from the fourth quarter. The timing of these wins represents a delay versus previous 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.

It added that, while the core United States business had performed as expected, a weak performance of the group's underutilised sites in the first half of the year would impact USA profit growth.

It added that it would incur £3m in one off cash costs "resetting the USA network" and management structure and may take a non-cash, asset impairment charge on full year results for the network restructuring. Greencore said it may take a non-cash, asset impairment charge to the FY18 income statement for the network restructuring.

Senior management is being re-shuffled with outgoing Greencore US CEO Chris Kirke returning to the United Kingdom and handing over to chief operating officer Chuck Metzger and group CEO Patrick Coveney.

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