Greencore to net €130m in sugar move
It will also have much more money to invest in its convenience food sector.
In time it could target the US and other international markets with its British-based convenience food range, chief executive, David Dilger, told analysts in New York recently.
In the case of sugar, Greencore’s compensation package was a maximum of €145m under the outline agreement on sugar reform.
But the EU Commission said contractors and growers are entitled to 10% of that figure. Growers are to get €50m in compensation anyway, but may challenge the pay-outs to Greencore.
The company is expected to defend its position strongly, despite the high media profile the controversy may yet generate.
In a review of the sugar sector, Davy Stockbroker’s food analyst, John O’Reilly, says the deadline time is running down.
If this is the last year of sugar production in Ireland the food analyst says the impact will hit Greencore’s earnings in the short term.
Last year the Group made operating profits of €20m from sugar.
Mr O’Reilly believes the group’s Hazlewood convenience food operations in Britain have improved significantly in the past year and can be exploited to greater effect in future with sugar out of the equation.
The future is in the food division, where last year the group boosted operating profits by over 16% to €67.7m in the year to end September 2005. Mr O’Reilly said this was a much stronger performance than he thought possible.
While profits will be hit in the short term, Mr O’Reilly and other analysts believe the group has turned a significant corner in terms of its convenience food set-up in Britain, where it has boosted its margin to 8%.
