Greencore is suspending financial guidance amid the uncertainty from coronavirus as the Ireland-based business said it is seeing a “marked reduction” at the retail level for its food-to-go categories.
The London-listed convenience foods manufacturer said in an exchange filing today (30 March) it is “tightening” its production network for food-to-go products and putting associated workers on leave by means of the government’s job retention scheme recently announced to support businesses through the crisis.
Board members and executive directors of the UK-centric firm, which also produces chilled snacks, ready meals and soups and sauces, will voluntarily take a 30% cut in their base salaries for three months, while the leadership team is accepting a 20% reduction.
“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 FY-20,” Greencore said. A little more than ten days ago, the company said it was too early to predict the financial impact from coronavirus, but now says the environment has changed since the government-imposed lockdown measures.
Greencore added it will “defer a substantial portion of previously planned capital expenditure and will not be proceeding with an interim FY-20 dividend payment”. It said the company “retains substantial and increased financial headroom, with cash and undrawn committed bank facilities of approximately GBP265m (US$327.7m) at 27 March”, including a new GBP75m debt facility due in 2021.
The company said the reduction in demand for food-to-go products such as its sandwiches, salads, sushi and chilled snacks, has partly been offset by “sustained volume growth” in its other convenience foods categories.
Greencore is also striving to help others outside of its own business as well as ensuring the health and safety of its workers. “The group is working hard with customers as well as Government agencies, including the NHS and local communities, to leverage our capability and capacity to provide high quality fresh prepared food to both consumers and frontline workers during this pandemic,” the company said.
It continued: “Greencore is playing a systemically important role in a reset food industry that has become a critical component of the UK infrastructure through this pandemic. The group’s colleagues have been designated as ‘key workers’ and there is a powerful sense of commitment, skill, spirit, and purpose across the workforce in performing this role.
“To support colleagues’ safety during this time, the group carried out a wide range of precautions and enhanced safety measures, focusing in particular on implementing an extensive set of social distancing initiatives across its manufacturing and distribution network.”