Greencore sells bread firms for €30m

FOOD group Greencore has exited the bread making business in Britain by selling its remaining operations for €30 million.

But Greencore will only receive half of this money upfront and will need to wait five years to be paid in full. Chief executive David Dilger said the group's decision to quit the bread market was a positive development.

"This further sharpens the focus of our resources on our convenience food categories which have strong growth prospects and leading market positions," he said.

The bread business attracts lower margins than the rest of Greencore's British operations and has suffered from strong competition in recent years. The sale will free up the group to give greater emphasis to its more successful ready-to-eat businesses.

Greencore is selling Rathbones Bakeries, which operates eight bakeries in England and Wales, for €3m more than the net asset value of the business. But it will record a loss of €10m after writing off goodwill. The group received €17m from the earlier sale of a bakery in Milton Keynes and insurance proceeds after a fire destroyed its Trafford Park bakery last year. It has now raised a total of €47m from its British bread operations, which together recorded a slight loss of €0.4m in the last financial year, from sales of €102.8m.

The group will use the proceeds from the sale to reduce its debt burden. Greencore has worked hard at restructuring its debt, which has fallen steadily from approximately €900m following the group's acquisition of British food group Hazlewood in 2001, to €430m at its last year end.

Greencore shares were up 1c at €3.11 in afternoon trading yesterday.