Greencore reports €64m loss after company write-offs cost firm €123m
The company, which reported a pre-tax loss of €5.9m the previous year, took a €72m hit thanks to the closure of its sugar factory in Carlow and the centralisation of all sugar operations in Mallow. There was a further €51m bill from the company’s exit from its loss-making pizza business in Britain, which was given away to local management for free last month.
But the company also received tax credits of €17m in relation to these costs to ease some of the pain.
Turnover from continuing operations edged ahead by 1% to €1.33 billion, while there was good news on the operating profit line, which was 4% ahead at €104m when loss-making discontinued businesses were stripped out. The results were within the range of analyst forecasts.
Chief executive David Dilger said the results were solid but warned further trouble may be ahead. “We have taken hard decisions in 2005 and this coming year may well require further decisions, particularly given impending EU sugar regime reform,” he said.
Mr Dilger said Greencore wanted to stay in the sugar business but there was “no prospect” of maintaining current levels of profitability in sugar due to proposed industry reforms. He declined to speculate on the chances of Greencore quitting the business if reforms hit hard, saying it “wouldn’t be helpful.”
There was also bad news from the group’s malt business, which continued to suffer from industry overcapacity and falling prices that squeezed margins.
The combined ingredients and agribusiness division had a tough year, as sales from continuing operations fell 6% to €492m and operating profits slid 11% to €41.4m.
But he was more upbeat about Greencore’s convenience foods business, which now accounts for 62% of operating profits, up from 25% five years ago. Mr Dilger said convenience foods would dominate Greencore’s future business and he was confident about these businesses after “a great performance” last year. Turnover jumped 7.5% to €846m as operating profits surged 16% to €59m.
The company’s debt burden leaped €11m to €398m during the year, however.
