Greencore profit growth has been dented in a “challenging” half year by problems in the firm’s US operation.

While group revenue rose 22.6% year on year in the first half of the current financial year to £1,238.5m, adjusted operating margin dropped 70 basis points to 4.8% following investments in the UK ready meals business and because a greater proportion of group profits were generated in the lower-margin US division.

“The first half of FY18 has been challenging for Greencore and its shareholders,” said Greencore chief executive officer Patrick Coveney, who is to spend more of his time leading the US business.

“While we delivered strong revenue growth in both the UK and US, profit growth was impacted by the challenges experienced in the original part of Greencore’s US division

Greencore said it had extended some of its long-term partnership agreements with key customers and secured new business wins.

Strategic investment in the UK division had returned to normal following increased spending over the past two years. Greencore’s remaining major project, the refurbishment and extension of the group’s largest ready meals facility in Warrington, is set to complete by the end of the current financial year.

As previously announced, the business is exiting the cakes and desserts market with the sale of its operation in Hull to Bright Blue Foods, and the planned closure of its Evercreech desserts site this summer.

Revenue in the UK & Ireland convenience foods division rose 7.2% to £734.9m in what it described as a challenging trading environment. Adjusted operating profit increased slightly to £47.1m.

Food-to-go revenue increased 10%, driven by category growth and the incremental impact of previously announced business wins. The business also benefited from growth in revenue from the distribution of third-party products through its Direct to Store network following consolidation in the distribution industry.

“The dynamics of the wider food-to-go market remain favourable and are supported by consumer demand for convenience, snacking and a preference for healthier products,” stated the business.

“There is also continued customer support for food-to-go as an incremental, high-margin category and the group is actively supporting the innovation and commercial effectiveness of customers’ product ranges through various initiatives.”

Revenue from the US division rose 55.1% to £503.6m, which reflected the acquisition of Peacock Foods in December 2016.

In the Peacock part of the business, pro forma revenue grew 15.5% and volume grew 12%. However, pro forma revenue and volume in the original Greencore part of the business declined 23.7% and 25% respectively, driven by previously announced contract loss in the group’s Jacksonville facility last year.

Greencore has reviewed its US strategy to focus on its branded food partners. It has also ceased production at its Rhode Island facility and plans to sell the site.

“As a result of the significant strategic, network and organisational measures that we have taken in order to address these challenges, we believe that our US business is now much better positioned to deliver an improved performance in the second half of the year and beyond,” said Coveney. “We anticipate strong organic growth for the remainder of FY18”.