The UK’s largest sandwich maker Greencore sank to a loss in the six months to March and issued a cautious outlook for the full year as Covid-19 restrictions continued to eat into sales of sandwiches, salads and sushi.
Greencore said revenues fell 19 per cent to £577m for the six months, resulting in a loss of £1.8m, down from £27.3m of pre-tax profits in the same period a year earlier, as consumers stuck at home spent less on convenience foods.
The group, which also makes chilled ready meals, soups and sauces, said adjusted operating profit for the current financial year would be ahead of last year if the current UK road map out of lockdowns continued.
But the sales figures and outlook disappointed analysts who had been expecting stronger figures. Shares in the group were down 13.2 per cent to £1.48 in morning trading on Tuesday.
Patrick Coveney, chief executive, said: “This has been a challenging period for Greencore, but the consistent build in our revenues since early March as lockdown measures have eased and Covid-19 cases have fallen give us real cause for optimism.”
He added: “We are confident of being able to build back the business rapidly and profitably, and are optimistic about the medium-term prospects for Greencore.”
Revenues in food-to-go categories had been running at about 14 per cent below pre-Covid levels since the start of April, as coronavirus restrictions were gradually lifted.
Dublin-based Greencore suspended its dividend last year, put in place cost-cutting measures and held an £87m equity placing in November to help deal with the impact of the pandemic.
The company said it had secured new contracts in the past year equivalent to £175m of annualised pre-Covid revenues, which would aid recovery.
Nicola Mallard, analyst at Investec, noted: “Clearly, this year is going to be still badly hit by Covid, but the progress that appears to be coming through and new wins should stand the company in good stead for a further good uplift in [the 2022 full year], although it continues to flag that profit recovery will lag revenue recovery.”
Mallard added: “Hence, it is likely to be [the 2023 full year] before we start to see old profit levels returning.”