Convenience food maker Greencore has suspended its full-year financial guidance and outlined moves to eliminate operating costs after seeing a reduction in demand for some of its products.
The UK’s biggest sandwich maker said it was playing “a systemically important role” in a reset food industry that has become a critical component of the country’s infrastructure during coronavirus outbreak.
However, the company noted that it had seen a marked reduction in demand for its food-to-go categories in grocery retail, which has been partly offset by sustained volume growth in its other convenience categories.
Greencore stated that it was taking “prudent measures” to protect its profitability and cashflow. It is tightening its food-to-go production network and furloughing impacted colleagues, using the government’s coronavirus job retention scheme.
Greencore also said it is working to eliminate non-essential operating costs, adding that its board and executive directors have voluntarily agreed to take a 30% reduction in respective fees and base salary for a period of three months. The company’s wider leadership team is also taking a voluntary reduction of 20% of base salary for the same period.
Greencore stated that all these moves will be kept under review.
“In this context and given the ongoing level of uncertainty around the possible duration and impact of COVID-19, the group is suspending financial guidance for FY20 and the group’s outlook for FY20 included in our FY19 full-year results statement and FY20 Q1 trading update should no longer be considered current,” it said.
The company is deferring a substantial portion of previously planned capital expenditure and will not be proceeding with its interim dividend payment.
Greencore concluded the update by saying: “Overall, the group retains substantial and increased financial headroom, with cash and undrawn committed bank facilities of approximately £265m at 27 March 2020. This includes a newly agreed additional £75m committed debt facility which matures in March 2021.
“While the duration and impact of this pandemic remains uncertain, all of our stakeholders are continuing to work together to protect the business. The Board is ensuring that Greencore remains a purposeful and hugely relevant business, feeding the UK right through this period, and importantly that it is also equipped with the team, strategy, reputation and balance sheet to accelerate forward when the pandemic passes.”
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- Can anyone be certain of predictions made up to a year ago?
