As well as the Somerset-based cake manufacturer, the company has also acquired Blaen Twyni, Danone's mineral water production facility in Wales. The total cost of the purchases amounted to £15m (€21m), Greencore said. "These are strategic acquisitions which will assist in the diversification of our business," said chief financial officer Patrick Covenay. "The Ministry of Cake enhances our growing presence in the foodservice sector and the Blaen Twyni facility is a valuable addition to our thriving water business." Greencore, formerly owned by the Irish government, moved out of the sugar business last year after changes to the EU sugar regime. The new regime came into force last year and is aimed at improving competitiveness within the bloc, including offering financial incentives to encourage less profitable producers to leave the market.
In 2005, the company said legal advice it had taken suggested it would be entitled to 90 per cent of the €146m compensation fund allocated to Ireland by the EU for temporary restructuring. After the policy changes came into force, Greencore aimed to strengthen its position in the convenient foods markets, and built up its sandwiches, ready meals and pizza divisions. "Our convenience foods division continues to compete in attractive product categories, growing at levels above the total food market and delivering strong economic returns," he said. Covenay said the Ministry of cake acquisition will help enhance Greencore's position in this sector, adding to the company's current four cake factories in Yorkshire, the UK.
Likewise, the water production facility in Wales will complement the company's existing mineral water plant in Scotland, he added. Earlier this month, the company reported a drop in operating profit in the convenience foods sector, attributed to poor summer trading and rising prices for bread, flour, dairy, eggs and cooked meats. However, the overall performance of the company almost made up for the loss of its sugar refining profits, thanks mainly to the recovery of the malt markets. An improved supply and demand balance for malt contributed to a jump in operating profits from Greencore's other businesses from €5.6m to €26.6m, a "more acceptable return", Mr Dilger said.
The group as a whole reported operating profit of €85.1m (including exceptionals) for the year ended 28 September, up 11.3 per cent from 2006, and turnover of €363.9bn, up from €349.9bn last year.