Activist investor Oasis Management has almost doubled its stake in Greencore to become its largest shareholder, while calling for the food-to-go giant to expedite its turnaround plans.
According to a regulatory filing yesterday (11 July), the Hong Kong registered hedge fund moved from owning 5.2% of Greencore’s stock to 10%, which saw it replace Boston-based Polaris Capital Management at the top of the shareholders list.
Representatives for Oasis confirmed it had been frustrated that London-listed Greencore had failed to pay any dividends over the past four years, despite it having a lower debt burden than fellow food-to-go supplier Bakkavor Group and Premier Foods, owner and producer of Mr Kipling and Cadbury Cakes brands. The fund had previously agitated for change at Premier Foods with a revised relationship agreement unveiled in 2021.
Oasis was said to have been building its stake in Greencore over several years, reaching a 5% threshold in March 2024 which saw its holding become public. Over the past four months, Greencore’s share price has risen by 80% to reach its highest level since April 2020.
While Oasis expressed satisfaction with Greencore’s current management and turnaround plans – including dropping less profitable client contracts, cutting jobs, and improving efficiency at its manufacturing plants – it said it believed these measures could be actioned faster.
A spokesperson for Greencore noted that it did not comment on investors’ shareholdings.
Headquartered in Dublin, Greencore supplies own label ranges including pre-packed sandwiches, baguettes, and wraps to all major UK supermarkets.
Back in February of this year, the firm announced completion of a £50m share buyback programme, marking the end of a two-year value return. In its latest trading update posted in May, it said it was targeting to return a further £50m to shareholders over next 12 months, beginning with a share buyback of up to £30m.
It added that, if the business continues to trade as expected, the Board intends to declare a dividend for the year to September 2024.
Greencore’s H1 FY24 interim results also reported a return to pre-tax profitability, turning around a loss of £6.2m during the first half of 2023 into a £14.7m profit for the six months ended 29 March 2024.
In addition, it grew like-for-like H1 revenue by 4.1% to £866.1m, while a 6.4% decline in reported revenue was said to reflect decisions to exit low margin contracts and the Trilby Trading disposal to KTC Edibles.
“Greencore delivered excellent progress against its strategic priorities in the first half and continued to outperform the market in a difficult consumer spending environment,” commented CEO Dalton Philips.
Adjusted operating profit more than doubled to £28.1m in H1 FY24, up from the £11.8m recorded during the same period last year. The company stated that it currently expected its full-year adjusted operating profit for FY24 to be in the range of £86m to £88m, ahead of current market expectations.
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