Greencore Expects to Meet Estimates on Ingredients

Greencore Group Plc (GNC), the world's biggest maker of prepared sandwiches, said it's ``comfortable'' annual earnings will meet analysts' estimates, helped by its ingredients and property units.

The ingredients business probably will report ``strong growth'' during the year, the Dublin-based company said today in a statement released before its annual meeting.

Operating profit jumped almost fivefold last year at the ingredients unit, helped by prices for the malt used by brewers and distillers. That's helping to mitigate higher costs for wheat and other commodities at the prepared-foods unit, which makes soup for Wal-Mart Stores Inc.'s Asda U.K. supermarket chain and organic sauces for British grocer J Sainsbury Plc. (SBRY)

``The ingredients operations are continuing the strong momentum seen last year,'' Liam Igoe, an analyst at Goodbody Stockbrokers in Dublin, said in a research note. The securities firm has a ``buy'' recommendation on the stock.

The pound's drop against the euro may reduce operating profit by about 8 million euros ($11.7 million) should the single European currency continue to trade at 74 pence to 75 pence for the rest of the fiscal year, Greencore said. The company generates 80 percent of operating profit in sterling.

Stock Climbs

Greencore rose 8 cents, or 1.9 percent, to 4.38 euros in Dublin, giving the company a market value of 875 million euros. The stock added 5 percent on Feb. 11 after the Irish Independent reported that Exista hf, which owns part of Icelandic food supplier Bakkavor Group hf, bought a stake of more than 8 percent.

``Greencore doesn't need a change of ownership to implement the strategy which will generate value for shareholders,'' Chairman Ned Sullivan said at the meeting in Dublin. The company has ``seen a change on the share register,'' he said, adding that parties who have built a stake through so-called contracts for difference, or CFDs, aren't obliged to disclose their holding.

CFDs enable speculators to bet that a share price will rise or fall without owning any of the stock. The buyer and seller of a CFD agree to exchange the difference in an asset's price between the time a contract is opened and its closing.

``I don't think it's in the best interests in a fair functioning of the market,'' Sullivan said of the CFDs.

Pasta Prices

Demand for its prepared foods ``held up well'' in the fiscal first quarter, though there was evidence of a ``limited consumer slowdown'' in January, Greencore said.

Rising prices for pasta, milk and bread will boost the cost of ingredients in that unit as much as 10 percent this fiscal year, the company said in November. Greencore said today it was ``successful in working with customers to offset this impact,'' without giving details

The company, formerly known as Irish Sugar, closed its last sugar factory in 2006 and plans to develop some of the old sites. It plans to convert a former plant in the southern Irish town of Mallow into homes, offices, a hotel and golf course. Greencore also has applied to build developments at Carlow and Athy in Ireland and at Littlehampton in southern England.

Greencore had a net profit of 110.4 million euros in the last fiscal year to Sept. 28, compared with a year-earlier loss of 456,000 euros. The food producer raised its dividend for the first time since 2000, helped by European Union compensation for exiting the sugar market.

The company will receive a final payment of 83.4 million euros at the end of February after successfully challenging the Irish government's original award of compensation. That will lead to a one-time profit of at least 15 million euros in the first half.

Finance Director Patrick Coveney will succeed David Dilger as chief executive officer next month.

To contact the reporter on this story: Louisa Nesbitt in Dublin at

To contact the editor responsible for this story: Keith Campbell at

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