Mixed plate for Greencore
sandwiches, has reported a decline in sales for the first half of
2003.
Greencore, the Irish company which is the world's biggest producer of prepared sandwiches, has reported a decline in sales for the first half of 2003 as it continues to refocus its business on three main divisions.
But like-for-like growth from the ongoing business was good, the company said.
Turnover for the six months to 28 March was down from €936.5 million in 2002 to €743.8 million, mainly due to a substantially lower contribution from discontinued operations - €182 million in 2002 versus €20 million this year.
Like-for-like sales grew by 2.2 per cent, however, helping to push up operating profit from continuing activities by 7.4 per cent to €48.9 million. This growth, together with an increase in share of profit of associates and the reduction in net interest payments, more than offset the €8.5 million reduction in operating profit from discontinued activities, the company said.
As a result, pre-tax profits grew by 9 per cent to €31.1 million.
Greencore's chilled and frozen division performed very strongly in the first six months, the company said, with like-for-like sales up by 3 per cent and a 12 per cent increase in continuing operating profit to €18.2 million.
"The sandwich business enhanced its position as the world's largest sandwich manufacturer, with its high level of new product development resulting in top line growth again ahead of the market. A number of new ranges were successfully trialled with both existing and new customers, the full benefits of which will be seen in the second half of this year and the next financial year," said David Dilger, Greencore's chief executive.
There were also strong performances from the ready meals and quiche operations, in the latter case driven by product innovation and range extensions which helped the business perform well in the slower winter months. Chilled sauces and soup had a satisfactory first half, with strong growth in soup sales a particular highlight, but the group's chilled pizza business had a challenging first half, Dilger said.
"Although much was achieved, with the integration of volumes from the Bedford facility closed just before the start of the period and the closure and transfer of volumes from the group's other remaining topped pizza facility at Nelson in March, the necessary efficiency levels have not yet been achieved.
"In addition, the focus on operational improvement has resulted in some sales slippage, although this should be, in part, redressed by additional trade won since the end of the half year. Much still remains to be done to generate the returns which are possible for a business with a state-of-the-art facility and strong market position in this fast-growing sector. Our expectations are for considerable improvement in performance during the last quarter of this financial year."
A fire at one of the production facilities operated by the Roberts frozen savoury and dessert business has had no material impact on business at the subsidiary, Dilger said, and the company continues to hold a strong market position in the ever-expanding frozen savoury product market.
Like-for-like growth at the ambient foods business was a more modest 0.2 per cent during the half, but operating profit from continuing activities grew by 6 per cent to €11.1 million. Sales growth was impacted by a sales decline at the group's baked goods business, Rathbones, but there were improvements from the ambient sauces and pickles business (driven by new product development) and the Campsie Scottish mineral water business.
Greencore's third major business stream - ingredients and agribusiness - saw like-for-like sales growth of 3 per cent, while continuing operating profit grew by 4 per cent to €19.6 million.
Irish Sugar had a satisfactory first half, with a reduction in the company's quota offset by higher prices. Profits from the group's malt business increased, driven by excellent sales and marketing coupled with further efficiency improvements, while the various agribusinesses traded satisfactorily, with favourable March weather benefiting demand.
"The market dynamics in the two convenience food divisions remain attractive and the group's performance will continue to be underpinned by its strong market positions and excellent innovation skills, as well as specific initiatives in the individual businesses," commented Dilger.
"While much remains to be done in certain sectors to achieve an appropriate return on capital, most particularly in pizza and bread, we are confident of driving continued improvement in these businesses."
He concluded: "The group has been transformed over the last two years and now has a well-balanced, robust portfolio of businesses, which provides a solid platform for both profit growth and cash generation."
