Greencore Issues Profit Warning Amid US Problems

Tuesday, 13th March: Investors in the were put on the back foot from the get-go this morning with food convenience and sandwich maker Greencore setting the tone by issuing a profit warning, wiping out nearly a quarter of their value early morning as shares tumbled. The group have announced a restructuring and management reorganisation of its US capacity, noting the underutilisation of a number of its US sites with an expected £3m one-off cash cost to be incurred. Production at its Rhode Island facility is to cease from March 25th, although the site is to be retained for potential repurposing. Shares continued to slide in afternoon trade, eventually closing -30.31%.

UK Chancellor delivered his Spring Statement this lunchtime, bringing with him fresh growth forecasts for 2018; raising growth for 2018 of 1.5% vs November 2017 forecast of 1.4%. Hammond also told the House of Commons in his half yearly report that debt would looks set to fall from 2018-19, according to the OBR (Office for Budget Responsibility).

Sterling reversed from morning losses against the US dollar as Hammond spoke, but coincidentally, this came at the same time as the latest US inflation report. Prices in the US rose at a modest 0.2% in February after rising a seasonally adjusted 0.5% in January, leading to some economists to claim that inflation had moved back into “no cause for alarm” territory. Core prices, which exclude volatile food and energy components, rose 0.2% vs 0.35% in January. In the year to February overall prices rose 2.2% ; core prices rose 1.8%.  The Fed are set to meet next week in what looks likely (86%) to be the first of three rate rises in the US this year.

The ONS has carried out its annual review of what is actually in “the basket of goods” they use to measure UK inflation. Out goes Edam cheese, a bottle of lager in a nightclub and cash machine charges, to be replaced by chilled mashed potato, high chairs and quiche (to name a few). The basket of goods is meant to reflect contemporary habits and technology to calculate the changing cost of living, with the high chair the first representation of nursery furniture to be covered since the removal of a cot in 1999.

Indices in Europe were dragged lower over the course of day; FTSE -1.05%, CAC -0.64% and DAX -1.76% at the close. US stocks initially rose after the early morning inflation release although the DOW and S&P 500 have given up much of these gains. GBP/USD is +0.59% @ $1.3986.


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