Greencore prepared to airlift ingredients to UK in the event of hard Brexit

Food group Greencore has said it is prepared to airlift ingredients into the UK in the event of a hard Brexit.

The company held its annual general meeting in Dublin this morning, and CEO Patrick Coveney said a decision to airlift supplies including rocket and spinach for its UK sandwiches business will depend on customers – including many of the UK’s big supermarkets – agreeing to shoulder the extra costs.

The company makes more than 700 million sandwiches a year.

Greencore itself will need to make a decision in the next two to three weeks about triggering its own ‘no-deal’ planning, Patrick Coveney told shareholders.

The brother of Irish Foreign Minister Simon Coveney said that he is growing less optimistic that a deal to prevent the UK crashing out of the European Union in March will be found, but said he remains optimistic.

Greencore earlier reported an “encouraging” start to its financial year despite a challenging environment.

The company, which holds its annual general meeting in Dublin this morning, said that its revenue from continuing operations in the first quarter were £363.5m.

On a pro-forma basis, which excludes disposed sites and those that have ceased trading, revenue rose 5.8pc in the first quarter. It added that the increase was driven by growth in its food-to-go categories. Revenue was 5.7pc lower on a reported basis.

At the AGM today, shareholders voted on a planned tender offer that will see up to £509m returned to them.

The planned tender offer comes after Greencore, whose chief executive is Patrick Coveney, sold its US business last year for $1.07bn.

Greencore’s original plan to use a special dividend to divide the cash amongst shareholders was criticised by many investors. Those who had stumped up cash to bankroll its purchase of US-based Peacock Foods in 2016 for $746m, would have wound up with a hefty tax bill to effectively get some of their own money back if a special dividend had proceeded.

Greencore’s own biggest shareholder, Polaris Capital, had also opposed the special dividend, prompting the company to rethink the way in which it would split the spoils from the US divestment.

However, if the full £509m is not returned via the tender offer, Greencore will return the balance to shareholders after the completion of the offer, and probably via a special dividend.

The company, which makes more than 700m sandwiches a year, said this morning that it anticipates continued underlying revenue growth in its key convenience food categories during the current financial year.

“Adjusted operating profit growth will be driven by this revenue growth, improved operational performance, and by a planned review of central overheads,” it noted.

“Although the group believes the risks from Brexit are manageable in the medium-term, the near-term challenges associated with a ‘no withdrawal agreement’ are uncertain,” it warned.

Greencore said before Christmas that it has already started stockpiling some ingredients in advance of Brexit.

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