A fifth of Greencore’s (GNC) value was wiped off after warning on earnings for the year to 30 September 2018.
The convenience food business blames the underperformance on under-utilised sites in the US, the timing of new business contributions and the weaker dollar.
Adjusted earnings per share are now expected to be between 14.7p and 15.7p in 2018, down from a range of 15.7p to 16.6p.
There is a chance EPS could be lower as two-thirds of earnings are anticipated to be delivered in the second half of the financial year.
SHARE PRICE CRASH IMPLIES LACK OF CONFIDENCE
AJ Bell investment director Russ Mould says guidance ‘amounts to a 6% downgrade’ yet the shares have dropped by approximately 20%.
‘This implies the market is sceptical of the company’s ability to make up any first half shortfall in the remainder of the year and is spooked by the timing of the announcement,’ comments Mould.
In response to the underwhelming trading, Greencore is closing its Rhode Island facility due to its continued operating losses. This facility represents 4% of the firm’s US manufacturing footprint last year.
SENIOR MANAGEMENT RE-SHUFFLE
Senior management is being re-shuffled with outgoing Greencore US CEO Chris Kirke returning to the UK and handing over to chief operating officer Chuck Metzger and group CEO Patrick Coveney.
Investec’s Nicola Mallard says commercial developments by the company should improve its financial performance from the six months to September into its 2019 financial year, but this is later than previously expected.
