Skullduggery and currency take their toll at Greencore

By Jess Halliday

- Last updated on GMT

Related tags Operating profit Malt

Greencore’s ingredients division helped the Irish firm achieve reasonable results, as the convenience foods division was hit by a cost concealment issue in its mineral water accounting.

The Irish group has reported overall sales of €1.31bn for the full year ended 26 September – growth of 3.2 per cent, or 13.3 per cent on constant currency basis. Operating profit was €77.3m. In real terms this was a decrease of 4.5 per cent, but currency headwinds made a dent of €8.1m.

In ingredients and related property, turnover was €414.1m, up from €334m last year. Operating profit grew from €26.6m to €31.1m.

Cost concealment

Greencore said that the excellent ingredients performance has offset a decline in its convenience division.

When bottled water is taken out of the equation, convenience foods actually performed respectably, bringing home an operating profit of €50.1m.

However in the second half of the year the company discovered that a former financial controller had deliberately concealed costs. The 2008 results therefore had to bear an operating loss of €4m, compared to a re-stated loss of €2.8m in 2007.

A full balance sheet and financial control review were undertaken in the summer, with independent support from KPMG.

“No additional issues were identified but salutary lessons have been learned for the water issue and immediate steps implemented which have significantly enhanced the group’s control environment,”​ it said.

Driven by malt

The main driver was seen to be malt, which accounted for 60 per cent of the ingredients business – although molasses, edible oils and agri-trading also brought in good returns.

“The closer match of supply and demand has driven malt margins in the period above that seen in previous years,”​ said Greencore.

Over-capacity that has dogged the market in recent years has been redressed by lower malting barley sowings, and growth in biofuels.

Greencore has recently commissioned 20,000 tons more capacity at its Buckie plant to meet the shortfall in supply over demand in Scotland.

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