E-Malt.com News article: 1157

Food group Greencore has reported a 9% increase in pre-tax profits, before exceptional items, to €31.1m for the six months to March 28. The malt division increased its profitability, as both malt production and deliveries reached record levels. Five of the division’s eleven plants produced record volumes, including the two largest plants (Bury St Edmunds and Athy). In conjunction with strong cost management, the increased volumes had the effect of reducing overall unit costs for the year. In addition, a successful destocking strategy was introduced, with the average Group stock holding level of 3.3 weeks falling below the target of a maximum of 4 week stock levels.

Domestic and export malt margins for the UK operation continued to improve, whilst the rationalization of the branch network and other cost reductions further improved the competitiveness of the Irish business. The year also had the benefit of the first revenues earned by Rusmalt, the joint venture for the supply of management services in the procurement of raw materials and development of capacity and quality enhancement for Sun Interbrew in the Russian market. In the current selling season, the capacities of the Irish and Belgian operations are sold for the year, whilst the UK sales are almost complete. International demand and supply is more favourably aligned than has been the case for a number of years. Trading has been influenced by the worldwide barley supply and demand situation, with poor harvests in both Canada and Australia. Sales to date are fully covered by barley purchases, the Group is satisfied with the margin achieved, and is confident about the overall outcome for the financial year.

Greencore's malt business is substantial in global terms. It is the sixth largest malster in the world, built up by Greencore over the years through the Minch Norton and Williams Waller businesses in Ireland and through the acquisition of Pauls malt in the UK and Belgomalt in Belgium in the mid to late Nineties. Like with the sugar division, the results for the malt division are not separated out in the Greencore accounts. But last year was a more profitable one for this sector, with lower raw material prices due to lower malting barley prices and higher returns for malt at the other end. The company has several plants, but the one in Athy and the Bury St Edmund plant in the UK are among its most efficient. The latter is the largest of its kind in Europe and handles record volumes last year.

Greencore's malt division has a strong market position in Ireland where it holds over 70% of the market, while in the UK they would supply around one third of the market. Operating margin is estimated to be around 6 % in this business. The business is believed to have a turnover of around €230 million.


30 May, 2003