IRELAND: Exceptional charges drive Greencore to loss
Irish-based food and agribusiness company Greencore has announced a fall in sales and increased losses for the year ended 30 September 2005 hit by exceptional charges associated with restructuring and a planned disposal.
Turnover was €1.415bn (US$1.66bn), compared with €1.447bn in the previous year, while there was a retained loss of €124.3m, compared with a loss of €41.062bn the year before.
However, profit before tax, exceptional items and amortisation was up 6.4% at €77.7m. There was like-for-like sales growth of 7.5% in convenience foods and like-for-like operating profit growth of 16.4% in convenience foods.
The exceptional charges were €65.4m for the fundamental restructuring of Greencore Sugar and a €40.0m provision for disposal of its UK pizza business.
The convenience foods division has performed strongly, with like-for-like profits up 16.4% to €67.7m. The division now accounts for 62% of group continuing operating profit, up from 56% in 2004.
The ingredients and agribusiness division faced a particularly challenging market environment in 2005. The uncertainty surrounding EU sugar regime and significant over-capacity in EU malt markets led to a reduction in divisional operating profits of 11.2% to €41.4m.
The group incurred exceptional charges totalling €103.6m (net of tax) in this period. The largest component (€65.4m) relates to the cost of restructuring Greencore Sugar and consolidating the full processing operation at Mallow - a critical project which generates significant annual savings, positions the group in the top-quartile of European sugar processors and gives the group the operational strength to respond to the impending EU sugar regime reform, the company said. This project was delivered with little disruption to Greencore Sugar's processing business. Thegroup also took a charge of €40.0m to provide for costs associated with disposing of the loss-making pizza business in the UK in October 2005, thereby removing a business that had been a drag on the performance of Convenience Foods.
"These results demonstrate solid underlying performance. We have taken hard decisions in 2005 and this coming year may well require further decisions, particularly given impending EU sugar regime reform," said Greencore Group chief executive David Dilger.
"We are especially pleased with progress in convenience foods, where we now have high performing businesses right across the range of our operations, and believe that the extensive restructuring required since our acquisition of Hazlewood is now complete," he said. "This division has the strategic and operational model to succeed in the convenience food market and I am confident that we will make further progress in the coming year."
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