Consumer sales boost as group sells malt business

GREENCORE’S chief executive Patrick Coveney said consumer sales in the first half year have started to pick up for the group.

This gives the food group “grounds for optimism,” Mr Coveney said.

Speaking after an extraordinary general meeting in Dublin that voted in favour of the sale of the group’s malt business, Greencore said it has experienced “decent” sales momentum in the first half of the year.

His comments came after the shareholders approved the sale of its malting business to AxerealUnion De Cooperatives Agricoles, for €116.25 million.

Earlier, about 100 malting barley growers demonstrated outside the Westbury Hotel, where the EGM was held.

The malt division is based in Athy, Co Kildare, and there are growing fears that the French group will close Athy and import their Irish malt requirements at cheaper prices from Europe and elsewhere.

It is understood that two farmer shareholders walked out of the EGM in protest over the malt sale.

After the deal was first announced initially, Mr Coveney said that while Greencore Malt has a long and proud tradition, the sector has moved on internationally.

“We believe that with developments in the malt market and Greencore’s increasing focus on its core convenience food business in both the UK and US, now is an appropriate time to sell the business.”

Greencore Malt has seven plants, including three in Britain, with a combined capacity of 500,000 tonnes.

Sales of €217.2m were achieved in 2009, while operating profits of more than €20m were returned.

Greencore will use the cash from the deal to reduce its debt burden further.

It has also been agreed that the group will hold on to the insurance proceeds of €6.4m related to reconstruction costs at Greencore’s malting plant at Ghlin, Belgium, in 2008.

The backing for the deal yesterday by the group’s shareholders allows the group to fully focus on the convenience food sector of the British and US markets.

It has targeted sales of up to €1 billion in the US.

Last year the group had sales of more than €1bn from its combined operations, including malt.

It suffered a loss of nearly €2m in the year against a profit in 2008 of €61.2m.

This disposal is consistent with the group’s strategy to develop its core convenience foods business in Britain and the US and it will provide the group with further balance sheet strength.

Axereal was formed in June 2009, after two leading French cooperatives, Agralys and Epis Centre, merged their interests.

As a result, Axereal is one of the leading players in the French grain sector with a collection of more than 5 million tonnes of grain, with trade exceeding 8 million tonnes and a total turnover of €2.8bn.