Greencore has refrained from commenting on the recent move by Hong Kong activist fund Oasis Management to increase its stake in the UK-listed sandwich maker. Oasis, previously holding just over 5% in Greencore, has now raised its shareholding to 10%, as per filings released on the London Stock Exchange on 11th July.
“We don’t comment on either our investors’ shareholdings or any interactions we have with them,” a Greencore spokesperson said.
In its fiscal first-half results reported in May, Greencore, a supplier of private-label convenience foods to major UK retailers, recorded a 4.1% increase in revenue on a like-for-like basis to £866.1m ($1.12bn) but a 6.4% decline in reported terms. Volumes grew by 0.5% on a like-for-like basis.
The company’s food-to-go revenue, encompassing sandwiches, salads, sushi, and chilled snacks, saw a 4.6% rise in like-for-like terms to £578.9m. While sandwich volumes grew by 2.5%, Greencore observed weaker performances in the salads and own-label sushi categories.
In the convenience foods segment, which includes chilled ready meals, soups, sauces, quiche, ambient sauces, pickles, and frozen Yorkshire pudding, revenue saw a 16.9% decrease to £287.2m. Greencore attributed this decline to the sale of its edible oils Trilby business last year and its exit from low-margin contracts. Nevertheless, like-for-like revenue in the convenience segment rose by 3.1%.
Operating profit surged to £25.3m, marking a significant increase compared to the previous year’s £3.6m. Adjusted operating profit also saw a substantial improvement, reaching £28.3m as opposed to £11.8m in the corresponding period of the previous financial year.
Under the leadership of former Morrisons chief executive Dalton Philips, Greencore has been focusing on a strategy to enhance operating profit and margins while shedding low-margin contracts. This has led to the company’s decision to close a UK soup factory at Kiveton, alongside its ready meals and quiche operations at two other sites.
In response to Oasis’ increased shareholding, an unnamed source familiar with the fund’s perspective expressed contentment with Greencore’s management and improvement plans but suggested expedited efforts for better performance. Oasis had earlier indicated support for Greencore’s management and strategy, emphasizing potential opportunities for margin enhancement and value creation.
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