A statement by the Irish convenience food group Greencore in response to a significant share-price drop left more questions than answers this week.
After shares fell more than 14 per cent between Wednesday and Friday, the best the company’s top brass could come up with was that they weren’t aware of any developments that would have caused the drop. Everyone else, however, had heard the rumours concerning a loss of business at one of the company’s US plants.
In any event, despite the statement suggesting no developments, the company still saw fit to tell investors it had decided to shift the focus of its Jacksonville facility in Florida and stop using it for frozen food.
Cantillon would politely suggest that qualifies as a development.
In any event, the stock market ultimately drew its own conclusions and investors clearly decided that Greencore had, in fact, lost business. But the company didn’t admit such failures. Instead it told markets that the refocusing of the Jacksonville facility was being managed “seamlessly” and would have a limited impact on profitability.
In the interest of fairness, it’s worth noting that, as a London-listed consumer stock, Greencore is relatively sensitive to movements in the value of sterling, and there is no doubting that this week was a bad one for the price of the pound. Was that the root cause of its statement on a facility in the US? Probably not. However, we can’t rule out a small number of investors being spooked by currency fluctuations.
Back at Greencore HQ, chief executive Patrick Coveney and chairman Gary Kennedy were so beside themselves with the company's performance that they decided to pick up a few more shares. Between them they either bought or cashed in options on 60,000 shares at a cost of just shy of £120,000. Their glee, admittedly, calmed some investors as the stock retreated to positive territory by Friday afternoon.
Whether it was a loss of business in Jacksonville, currency fluctuations, or just some unhappy investors that caused the stock to tank on Thursday, Cantillon is still none the wiser.
