Ireland: Greencore’s sales increased by 2% in H1. The Malt division is consolidating production

Irish food group Greencore has reported pre-tax profits before exceptional items and goodwill of €32.6m for the six months to March 25, an increase of 8% on the same period a year earlier.

Sales were up 2% to €677.3m after sales from discontinued businesses were stripped out, and the company warned that market conditions were 'challenging'.

The company's convenience food division performed strongly, with underlying sales up 8% and underlying profits up 23%. Greencore said the division was operating in an increasingly competitive market, with pressure on prices and higher quality requirements from customers.

Sales in the ingredients and agribusiness division fell by 8% in the first half, with profits down from €20m to €15.3m. Greencore said the fall in sales was due to lower sugar sales and the closure of some operations in its malt division. The company said there was an EU-wide oversupply of sugar this year, leading to increased price competition. Higher fuel costs added an extra €2m to costs in this division in the period.

The group is facing reform of the EU sugar regime, with the Commission having made proposals for quota and price reductions last year and a final decision expected by the end of the year.

Greencore took an exceptional charge of €65.4m to cover the costs of closing its Carlow sugar manufacturing facility. When exceptional items and goodwill are included, there was a pre-tax loss of €49.3m.

Headline earnings per share increased by 6% to 14.2 cent, while an unchanged interim dividend of 5.05 cent is to be paid. Greencore shares were up six cent to €3.30 in Dublin on May 25.

An exceptional cost of E65.4m was charged in the period arising from the consolidation of all of the Group's sugar production at its Mallow site. This arose, principally, from asset write-offs, redundancies and other costs of closing the Carlow processing facility.

The Malt division is also consolidating production into its larger maltings. It closed two of its smaller maltings in the UK at the start of the period and announced the closure of its smaller Irish maltings at Banagher, which will be implemented by the end of the financial year.

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