Hazlewood put in place prospects of a dynamic future for Greencore

EIGHTEEN months ago David Dilger, chief executive Greencore Group, staked his career on Hazlewood.

Question marks hung over the strategy as the implications of what he had done unfolded.

Hazlewood was a hugely diverse group doing anything from prepared foods to nappies.

Dilger had a huge rationalisation plan to deliver on before the blueprint to give the former semi state company greater credibility as a broadly based food group.

It had been obvious that while it had Irish Sugar and the malting barley and flour operations, something more dynamic was needed to drive the firm into the 21st Century.

When Davy Stockbrokers decided to become joint brokers to the group the word in the market was that food analyst John O’Reilly, had given the business the thumbs up and would from now on be promoting the group as a good buy.

And with Davys still seen as the most influential of Irish brokers that was no small thing.

Overall the view in the market is that the gamble by Dilger to go for Hazlewoods with all the attendant risks have paid off or will pay off as the group is bedded in further Greencore in the period ahead.

In its annual report issued at the weekend Greencore has styled itself “The convenience food and ingredients Group” clearly reflecting the shift that has taken place since the Hazlewood acquisition in the UK. This is what the group has been striving to achieve. Until now it has not been successful in that endeavour.

Buying into Imperial Holly was not the best strategic move ever made by Greencore and until Hazlewood came along the fear was that Greencore would stay a boring group driven by sugar processing and malting barley.

Luckily Hazlewood has taken the Yawn factor out of the group and put in place the prospects of a much more dynamic future in the years ahead.

Not that the sugar business ought to be dismissed. It is the biggest profit contributor in Ireland, but the circumstances of the market suggest it will be very difficult to squeeze much more out of the business without driving the beet growers into frenzy.

In the year gone the malting business would have performed well in profit terms where markets were better and the business more efficient.

Also the group continues to effect programmes for increased on-going efficiencies.

Progress on margins in continuing operations was also visible, though not universally so.

In the key chilled and frozen division, which accounts for some 40% of group earnings, before interest and tax before goodwill operating margin widened from 5.2% to 6.1%.

That progress in the chilled and frozen divisions is the kind of boost Dilger and his senior executive team were looking for and the view in the market is that Greencore has moved on to a new development phase.

Last year the annual report shows Dilger was paid €487,000 in basic salary, €27,000 directors fees.

Of greater importance however is that the group delivered on the rationalisation and on the earnings targets it had indicated earlier.

Investors will welcome that from a sector that in this country has produced too many false dawns in the past.

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