TIDMGNC
RNS Number : 4900H
Greencore Group PLC
13 March 2018
13 March 2018
GREENCORE GROUP PLC
Business and Trading Update
Greencore Group plc ("Greencore" or the "Group"), the leading
international convenience food business, today announces a business
and trading update.
The key highlights are:
-- Restructuring of the US network to match capacity to commercial pipeline
-- Changes in the US leadership model and team
-- Updated FY18 outlook for Adjusted EPS(1) of 14.7p-15.7p to
reflect business developments and current exchange rates
US Network and Commercial Update
The acquisition of Peacock Foods in December 2016 greatly
enhanced the scale, operational capabilities and financial
performance of Greencore US. 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.
In its FY17 results and FY18 Q1 trading update, the Group noted
continued low capacity utilisation at some of the original
Greencore US sites. The Group is now restructuring its US network
to reflect the commercial pipeline and to address these utilisation
challenges.
-- Rhode Island: Current fresh production at the Rhode Island
facility will cease, effective from 25 March 2018. The facility
will be retained for potential repurposing. The Rhode Island
facility represented approximately 4% of the Group's US
manufacturing footprint and 2% of its pro forma revenue in FY17.
This decision will address the operating losses of the site that
have continued into FY18.
-- Jacksonville: In August 2017 the Group announced its
intention to repurpose the Jacksonville facility following the loss
of a supply contract. While capacity utilisation has been low
through the first half of FY18, we now anticipate that new business
wins will increase volumes and site utilisation from Q4 FY18.
-- Minneapolis: At the point of the Peacock Foods acquisition,
capacity utilisation and site economics were weak at the
Minneapolis site. Over the past 12 months the Group has delivered
several pieces of new business to the site, such that utilisation
has improved steadily through FY18.
Greencore continues to make progress on its US commercial
pipeline, most particularly with its current large Consumer
Packaged Goods ("CPG") customers. Plans are well advanced which, if
successful, would secure significant new business at several sites
in the Midwest region. The Group anticipates that such new business
would contribute revenue and earnings from the first half of FY19.
The timing of these wins represents a delay versus previous
expectations. Any incremental capital and cash costs related to the
delivery of this new business are not expected to be significant
for the Group.
Changes in the US leadership team
The Group has restructured its US leadership team to drive near
term performance and to exploit its growth agenda.
-- New leadership model: Patrick Coveney, Group CEO, will take a direct role in the strategic, organisational and commercial leadership of Greencore US, spending approximately half his time in the US. Chuck Metzger, COO of Greencore US, has assumed day-to-day responsibility for the US business and will report to Patrick. Chris Kirke, outgoing CEO of Greencore US, is leaving the Group to return to the UK and will work with Chuck, Patrick and the team to ensure a smooth transition.
-- New senior personnel: Since January, the Group has made
important additions to the US senior team, with four senior hires
in the areas of Commercial, Finance, Strategy and HR. These planned
additions, combined with the existing Peacock Foods operational
skills, and further investments in growth capability, significantly
strengthens Greencore in the US.
FY18 Outlook(2)
In the UK, the Group continues to anticipate good organic
revenue growth and a modest improvement in operating leverage in
FY18, notwithstanding softer volume growth in Q2 primarily due to
poor weather.
In the US, the core CPG business has continued to perform in
line with expectations. The network and commercial developments
announced in this update give the Group confidence in improved
financial performance through the second half of FY18 and into
FY19. However, the weak performance of the Group's underutilised
original sites in the first half of FY18, combined with the timing
of new business contributions, and the current GBP/USD exchange
rate, will reduce the expected rate of US profit growth in
FY18.
The one off cash costs of resetting the US network and the
management restructure are anticipated to be approximately GBP3m.
The Group may take a non-cash, asset impairment charge to the FY18
Income Statement for the network restructuring. The scale of such a
charge would be determined by the prospective future use and value
of these network assets.
For FY18 the Group now anticipates Adjusted EPS in the range of
14.7p-15.7p, with approximately two thirds of that contribution
delivered in the second half. This contrasts with current market
expectations of 15.7p-16.6p(3) . The Group also anticipates that it
will continue to progress towards its benchmark leverage ratio of
approximately 2x Net Debt to EBITDA by the end of the fiscal
year.
(1) Earnings for the purpose of calculating Adjusted EPS are
stated before exceptional items, pension finance items,
amortisation of acquisition related intangibles, FX on
inter--company and certain external balances and the movement in
the fair value of all derivative financial instruments and related
debt adjustments
(2) The information in the FY18 Outlook constitutes Inside
Information for the purposes of the Market Abuse Regulation
(3) Source:
www.greencore.com/investor-relations/analyst-coverage/
Conference Call
A conference call for investors and analysts will be held at
8.30am GMT today. Dial in details are below and a 7 day replay
facility will be available afterwards at www.greencore.com.
Dial in details:
Confirmation Code: 8829929
Ireland, Dublin +353 (0)1 2465621
+44 (0)330 336
United Kingdom 9411
United States +1 929-477-0448
For further information, please contact:
Patrick Coveney Chief Executive Tel: +353 (0)
Officer 1 605 1045
Eoin Tonge Chief Financial Tel: +353 (0)
Officer 1 605 1029
Jack Gorman Head of Investor Tel: +353 (0)
Relations 1 605 1020
Rob Greening or Powerscourt Tel: +44 (0)
Lisa Kavanagh 20 7250 1446
Billy Murphy or Drury | Porter Tel: +353 (0)
Louise Walsh Novelli 1 260 5000
NOTES TO EDITORS
Greencore is a leading international producer of convenience
foods with extensive operations in the UK and the US. Headquartered
in Dublin, it employs approximately 15,000 people in 30
manufacturing facilities across the UK and the US. On average, it
manufactures around 1.5 billion sandwiches, over 600m salad and
lunch kits, and 140 million ready meals every year.
In the UK, it is a supplier of own-label convenience food
products to all of the major UK supermarkets, and has world-class
manufacturing sites with industry-leading technology and supply
chain capabilities. It has strong market positions across
sandwiches and other food to go products as well as complementary
positions in other convenience food categories, including chilled
prepared meals, chilled soups and sauces, ambient sauces and
pickles, and Yorkshire Puddings.
In the US, Greencore is a leading manufacturer of convenience
food products for many of the largest food brands, convenience
retail and food service leaders in the US. It produces a wide range
of fresh, frozen and ambient products including sandwiches, meal
kits and salad kits. It has a well invested network of high
quality, scale facilities which supports the Group's ambitions to
grow in value added, assembly-led, convenience food
manufacturing.
For more information go to www.greencore.com or follow Greencore
on social media.
This announcement contains certain forward looking statements
with respect to the financial conditions, results of operations and
businesses of the Group. These statements involve risk and
uncertainty because they relate to events and depend upon
circumstances that will occur in the future. There are a number of
factors that could cause actual results or developments to differ
materially from those expressed or implied by these forward looking
statements. Nothing in this announcement should be construed as a
profit forecast. The Group expressly disclaims any obligation to
update these forward-looking statements other than as required by
law.
This information is provided by RNS
The company news service from the London Stock Exchange
END
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