Greencore Group – World’s Largest Sandwich Maker Suffers Setback, But Immediate Response May Limit The Downside

Late last week the Greencore Group (LON:GNC), the world’s largest sandwich maker, announced that it is taking the precautionary step of recalling various sandwiches, wraps and salads because of possible contamination with E. coli, it has not been detected in those products, but they are being recalled as a precaution.

The products called back were supplied to ASDA, Morrisons, Sainsburys, Boots, Aldi, Amazon and the Co-op.

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Greencore is not alone, because two other food manufacturers have also recalled their own products.

UK Health Security Agency Statement

The UKHSA is working with partners to investigate a Shiga toxin-producing E. coli (STEC) outbreak.

Darren Whitby, Head of Incidents at the FSA, said: 

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“Sandwich manufacturers are taking a precautionary measure to recall various sandwiches, wraps, subs and rolls in response to findings from investigations by the Food Standards Agency (FSA), Food Standards Scotland (FSS) and UK Health Security Agency (UKHSA) who are working to identify the cause of an ongoing outbreak caused by shiga toxin-producing E.coli (STEC).

This is a complex investigation, and we have worked swiftly with the relevant businesses and the local authorities concerned to narrow down the wide range of foods consumed to a small number of salad leaf products that have been used in sandwiches, wraps, subs and rolls.

Following thorough food chain analysis, these products are being recalled as a precaution. 

Infections caused by STEC bacteria can cause severe bloody diarrhoea and, in some cases, more serious complications. We therefore advise any consumers who have any of these products not to eat them.

The FSA is here to ensure that food is safe.

If there are products on the market that are not, we won’t hesitate to take action to remove them.”

The Business

Based in Dublin, the Greencore Group supplies all of the major supermarkets in the UK, as well as convenience and travel retail outlets, discounters, coffee shops, foodservice and other retailers.

It holds strong market positions in a range of categories including sandwiches, salads, sushi, chilled snacking, chilled ready meals, chilled soups and sauces, chilled quiche, ambient sauces and pickles, and frozen Yorkshire Puddings.

In the year to end December 2023 the group manufactured 779m sandwiches and other food to go products, 132m chilled ready meals, 45m chilled soups and sauces and 245m jars of cooking sauces, pickles and condiments.

The company carries out more than 10,400 direct-to-store deliveries each day.

It employs some 13,600 people in its 16 world-class manufacturing sites and 17 distribution centres in the UK, with industry-leading technology and supply chain capabilities.

Q3 Trading Update Soon

In just over a month’s time, we should be seeing the group declare its Q3 Trading Update, covering the thirteen weeks to end June.

Interestingly there have been no active short positions notified recently.

The shares were just 112.90p on 29th March, which was when I featured the group suggesting that the shares were too cheap.

They touched 139.40p just before the Interims Results were announced on 21st May.

Since then, they have been up to 178.60p – but the ‘e-coli news’ on 14th June saw them fall back to 160.20p that day, on the back of some 4.44m shares traded.

So Where Are They Heading Now?

Between now and the Q3 Update later next month the shares could easily sway in waves of uncertainty in the market as to just how the ‘rogue salad leaves’ have hit business.

I remind readers that analysts Clive Black and Darren Shirley a Shore Capital Markets were impressed enough on the Interims to upgrade their estimates by 5% for the full year to end December.

They were looking for £65.0m (£55.5m) adjusted pre-tax profits for the year, worth10.2p (8.9p) earnings per share.

Further out their 2025 figures suggest £72.0m profits and 11.6p per share in earnings.

On 21st May the group announced a £30m Share Buyback Programme and has subsequently purchased around 2.75m shares for cancellation, with the highest price paid being 177p per share, it bought 280,000 last Friday at an average 163.23p per share.

The question now asked by investors is whether they are now stalling in price, or whether they have further to fall back awaiting further news on the product recall and its effects.

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