On Tuesday of next week, 30th July, we should be seeing the world’s biggest sandwich maker declaring its Q3 Trading Update covering the April to end-June period.
E-Coli Outbreak
The Statement from the Greencore Group (LON:GNC) should cover an update on the effect of the e-coli outbreak in mid-June and the actions that the group took to minimalise any mega-impact to its business.
It was during the last two weeks of June that the group declared that it had taken the precautionary step of recalling various sandwiches, wraps and salads because of possible contamination with E.coli.
The products called back were supplied to Aldi, Boots, ASDA, Morrisons, Amazon, the Co-op and Sainsburys.
Greencore was not alone, because a number of other food manufacturers also recalled their own products.
A fair guess is that the major supermarkets and leading independent retailers were also somewhat cautious with their orders to Greencore for at least the month covering and subsequent to the outbreak.
The Business
The Dublin-based Greencore Group supplies all of the major supermarkets in the UK, as well as convenience and travel retail outlets, discounters, coffee shops, food service and other retailers.
It is a leading manufacturer of convenience foods, supplying a wide range of chilled, frozen and ambient foods to retail and food service customers in the UK.
The company operates 16 world-class manufacturing sites, made up of eight sandwich units, five chilled ready meal units, three salad units, one chilled quiche unit, one ambient cooking sauce and pickles unit and Yorkshire pudding unit.
The group also runs 17 distribution centres in the UK, with industry-leading technology and supply chain capabilities.
Its principal customers include: Aldi, ASDA, BP, Boots, Caffe Nero, Co-op, Lidl, M&S, Poundland, Sainsburys, Shell, Tesco and Waitrose.
The group holds very 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.
The £796m capitalised group is no mean player within the food sector in the UK – last year it made some 779m sandwiches and other food-to-go products, as well as 132m chilled ready meals, 45m chilled soups and sauces and 245m jars of cooking sauces, pickles and condiments.
Analyst View
Analyst Clive Black at Shore Capital Markets is positive about the group’s prospects.
For the current year to end September his estimates, before the e-coli scare, were for slightly lower sales at £1.81bn (£1.91bn) while expecting a better margin return to £65.0m (£55.5m) adjusted pre-tax profits, lifting earnings up to 10.2p (8.9p) with a dividend of 3.4p (nil) per share.
For the year to end September 2025 he estimated £1.85bn revenues, £72.0m profits, 11.6p per share in earnings and a 3.9p dividend.
Leaping forward to the 2026 year, his figures were for £1.88bn sales, £83.0m profits, earnings of 11.6p and a 4.5p dividend.
Market opinions appear somewhat mixed – eight analysts follow the stock, with three calling it a Buy, three a Hold, one a Sell and one of no opinion – with the highest Price Objective being 200p a share, the lowest 110p, and the average being 158p.
My View
This company deserves a far better rating than that currently accorded to it, despite any scares.
It has significant market shares and is a major supplier into the retail sector.
Now trading at 177p they should be bought by medium-term growth investors, especially on any price dips.
