Greencore back on course to solid growth
What was good about the figures was that all aspects of the business were showing growth.
It appears also that most of the write-offs related to its major British acquisition done back in 2001 are also out of the way and the group can now focus on expanding its convenience food and drinks offerings.
For the record, the group is one of Europe’s leading producers of convenience foods, with dominant positions in several of its core categories of business.
It is also an ingredients and agribusiness supplier operating in Ireland, Britain, the Netherlands and Belgium.
And as a producer of well over 200 million sandwiches annually, it is Europe’s largest sandwich specialist.
It is also Britain’s largest Christmas cake manufacturer, with a 33% market share, its largest producer of customer-branded mineral water, selling 190 million units per year and the leading malt producer in Ireland, Britain and Belgium.
Not so long ago the group was still struggling after it made its strategic acquisition of Hazelwood in Britain for over €440m in 2001.
For years it battled to whip the group into shape, sometimes against the odds, and markets remained sceptical about its future.
However, the latest set of figures show that not only is the food division is in good shape — which now accounts for about 80% of profits — but the agribusiness division as well.
With the malting business accounting for 60% of that division it saw profits increase by over 300% to €8.2m.
Food in the first half suffered a slight dip in margin of about 20 basis points to 6.7%, but sales were ahead of the competition, which augurs well, with operating profits up 5% in the period.
The food results supports the group’s claim that it holds the dominant or number two slot in most of the categories it serves in the highly competitive British retail sector.
The convenience food division is showing it has the ability to stay the course and the rationalisation work carried out by Greencore is starting to pay off.
The boost to the agribusiness sector is a welcome turnaround while the group has upped its earnings forecast for the year by 10% for the current year, a further testament to the fact that the group is moving in the right direction.
One of the interesting points to emerge since then — which may have a bearing on the group’s future — is that local authorities will not assess the group’s plans for its 330-acre site at Carlow until the first half of next year.
Greencore is now in a strong position irrespective of what Liam Carroll — who owns close to 30% of the company — decides to do.
The emerging strength of its food and agribusiness operations will oblige Mr Carroll to pay a full price for the business overall if he wants to go that road in order to get his hands on the group’s valuable property plays that also include key sites in Mallow and Britain.
If he makes a full bid he should not find it too difficult to find a private equity firm to row in behind his bid and take the food and agribusiness operations off his hands.
Such a development would be tough on chief executive, David Dilger and his top team who have lived in the public glare as a quoted company for many years as the company struggled to get an operating base on which to build for the future.
If Mr Carroll makes an outright bid then Greencore will cease to be a publicly quoted company.
Regrettably the group’s ownership is up in the air ironically at a time when it is emerging as a significant player in the European food space.
