Agri-business group Greencore has beaten market forecasts with full-year profits of £58.2 million and earnings per share of 25.7p. But what is seen as a cautious earnings growth target over the next five years has led analysts to revise their 1999 forecasts downwards and Greencore shares fell 10p to 290p.

Commenting on the group's strategy after the release of the results, chief executive Mr David Dilger said Greencore had an earnings per share growth target of more than 50 per cent over the next five years - cumulative growth of about 8.5 per cent a year.

Market sources contrasted this 8.5 per cent annual growth with the 15 per cent set by other food companies like Kerry and IAWS, and said that either Greencore was being too cautious in its targets or that the other food companies were too aggressive. One analyst said 1999 earnings forecasts may now be pulled back from 29-29.5p per share to under 28p.

"That puts Greencore on a prospective price/earnings ratio of over 10 and it's difficult to justify that rating if earnings are only going to grow by 8.5 per cent a year," said one analyst, who added that Greencore shares may have to fall towards 270p before finding a floor. The shares were offered at 290p yesterday and further weakness seems likely.

Greencore's 1998 figures were good, however, with turnover up almost 27 per cent to £592 million and pre-tax profits 17 per cent higher on £58.2 million. Sales and profits were up 15 per cent when the two big acquisitions in Britain during the year, Pauls Malt and Paramount Foods, were excluded.

By far the best results came from Greencore's food division, which takes in flour, malt, bread and consumer foods where - boosted by Pauls - sales were up 79 per cent to over £327 million while operating profits were up almost 59 per cent to £22.4 million.

In contrast, sales of sugar fell 7 per cent and agri-business sales - fertilisers and animal feed - were down also by 7 per cent. The sugar division did, however, boost operating profits by nearly 6 per cent to £27.6 million, while agribusiness profits were marginally higher on £6.5 million.

Overall, the results continued the trend of an increasing proportion of operating profits coming from the food division. Food accounted for 40 per cent of operating profits last year compared to 20 per cent in 1995 and the group aims to increase this to 50 per cent by the end of 1999 and 66 per cent by 2001.