Greencore boss Dalton Philips faces setbacks at AGM as small shareholders demand dividends

Individual shareholders attending convenience food maker Greencore’s annual general meeting (AGM) pushed for dividends on Thursday as the group struggles to regain profits in a volatile market.

Chief executive Dalton Philips – four months in office after nearly five years at the DAA – said the Greencore board must find a “balance” on how to return profits to shareholders at the annual general meeting.

The call for dividend payments came after Greencore announced two buybacks last year, the most recent of which – a £15m buyback, part of a £50m total return to shareholders – began in November.

“If you have stable income, you can make these decisions,” he told reporters after the shareholders’ meeting. “Right now earnings have been very volatile.”

The UK-listed company’s share price has fallen by more than half in a year, a fact that angered some shareholders attending the meeting at Dublin’s Aviva Stadium.

The Greencore board — also on the move with the resignation of Gary Kennedy and the recent appointment of chairman Leslie Van de Walle — has delayed a decision on dividends until at least May 30, when it is due to release its half-year results. But it doesn’t rule anything out.

The backlash from shareholders came after a trading update revealed lower-than-expected volumes in some of Greencore’s key categories, which the group said were due to the economic slowdown, strike action in the UK and higher costs, which it has struggled to pass on to big retailers .

While first-quarter revenue rose 19 percent year-on-year to £463 million (€525 million) and pro forma earnings rose 18.9 percent, volumes in Greencore’s most lucrative food-to-go business remained light behind the first quarter of the previous year.

Greencore’s adjusted operating margin for the full year last year was 4.2 percent, up year-on-year but small compared to its peers.

Mr Philips said he expects growth this year to come from sandwiches, new customers and “cost elimination”. He said the group is not “yet” thinking about downsizing.

“We are not that far yet. But I want to look at the overall cost base and our assets. Are we getting the best out of them? Look at the downtime, can we do third shifts, do we work seven days? All of these things generate costs.”

Cost negotiations with supermarket giants are also getting tougher, Philips said.

“Right now there is a lot of resistance to price assumptions and that means that in some cases relations can be quite strained,” he said.

“We say: ‘We have to pass on these costs’. I mean you’ve seen our margins. And the retailers say, ‘We won’t.’ And that can lead to robust talks.” Brexit is also impacting sales in Ireland due to tougher customs rules.

“We would like to sell our sandwiches in the Republic,” said Mr. Philips.

“We can’t get it at the moment because of the durability it’s difficult to get. Anything that alleviated that would clearly open up a bigger market for us.”

Despite the problems raised by the audience, all votes at the AGM were carried by large majorities of shareholders.

So how does a job in sushi, sandwiches and ready meals compare to life at the DAA?

“As a CEO, you always face challenges. It’s rarely quiet. The food sector in the UK is very volatile. Certainly the emotion of people who miss flights is very instinctive and very real. Both are challenges.”