Ireland: Greencore to restructure this year its malting core operations in the UK and Ireland

In its recent interim statement, Greencore Group plc, a major international manufacturer and supplier of food ingredients and prepared foods with manufacturing sites located in Ireland, Great Britain, The Netherlands and Belgium and employing over 9,000 people, highlighted that international malt prices reached a low point in the cycle at the end of 2005, driven, in large part, by industry over-capacity.

That pricing impact, allied to energy increases of more than 50% year on year, had a negative impact on the profitability of the Greencore Group’s malt business. During the period, the business benefited from a legal settlement of EUR4.9 million. Last year, Greencore took the step of closing three maltings; this year the focus is on restructuring its core operations in the UK and Ireland, the net costs of which are EUR4.6 million. This work is ongoing and Greencore believes it will ultimately leave it well placed to benefit from the anticipated improvement in the malt cycle.

However, malt remains a challenge but the anticipated upturn in malt prices, which is taking longer to materialise than Greencore had hoped, is expected to assert itself in late FY06 and FY07.

Greencore’s interim statement operating profits are set to EUR42 million for the six months ended 31 March 2006. It highlighted adjusted EPS up 2.2% to 13.7 cent, a profit after tax up 14.3% to EUR30.5 million, a group operating profit of EUR42.1 million in line with the first half of FY05.

In the six months under review, Greencore’s Ingredients, Agribusiness and Related Property division has been subjected to unprecedented challenges. The division reported an Operating profit decrease of 5.4% to EUR11.8 million. Continued over-capacity in European malt markets placed significant pressures on the division.

The Greencore Malt is one of the leading suppliers of barley malts to the brewing, distilling and food industries worldwide. Clients include many of the worlds leading brewing and distilling groups and the Group supplies over 10% of the freely traded malt on the world market. The Greencore Malt is the sixth largest malting group in the world with an annual capacity of over 540,000 miilion t and exports account for over 40% of this total capacity.

The company is the leading supplier of malt in its domestic markets and exports malt to 61 countries worldwide with major markets including Japan, Venezuela, Nigeria, and Russia.

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