12th Jan 2005 14:37
Greencore Group PLC12 January 2005 GREENCORE GROUP PLC Greencore to Consolidate Sugar Manufacturing at One Site Greencore Group plc ("Greencore") announces that it is to consolidate all of itssugar manufacturing at its Mallow site and will close its Carlow manufacturingfacility in mid-March 2005. In addition, following recent union agreement, aredundancy programme will be implemented at the Mallow facility and all otheractivities of the business will be streamlined. This decision has been takenfollowing a strategic review of Irish Sugar in anticipation of pending reform ofthe EU sugar regime and the increasingly competitive nature of its markets. In total, 189 full-time and 137 seasonal employees will become redundant, withIrish Sugar's total workforce reducing from 614 to 288. Consultations willcommence immediately with all employees impacted by the closure. Work will now begin on upgrading and increasing the capacity of the Mallow plantand will be completed in time for the 2005 processing campaign. The campaignwill also be extended into January of next year; this extension will be scaledback over the following years in line with the anticipated quota reductionsarising from the EU sugar regime reform. The net cash outlay arising from this consolidation is anticipated to be between€20 million and €25 million, principally comprising the capital investment atMallow, redundancy costs and site decommissioning costs, less anticipatedproceeds from surplus asset disposals. The consolidation will also result inthe annual average capital expenditure requirement of Irish Sugar reducing bysome €4 million for the foreseeable future. The consolidation will reduce Irish Sugar's annual cost base by some €6 millionto €7 million by the 2007 campaign, before taking account of the costs offinancing the consolidation. This will, however, only partially offset theanticipated profit reduction that will arise from the EU sugar regime reform. The redundancies and asset write-offs will give rise to an exceptional loss,whilst an exceptional profit is anticipated from the asset disposals. Theexceptional loss, to be provided for in the 2005 accounts, is expected to amountto some €65 million, of which approximately €26 million is anticipated to be acash cost. The amount and timing of the exceptional profit will depend on theasset disposal process. Commenting on the consolidation, Greencore Chief Executive David Dilger said: "There is a long and proud tradition of sugar production in Carlow. Thisdecision, therefore, has been particularly difficult and painful but,nonetheless, unavoidable. "European sugar processors are facing increased levels of competition andimpending regime reform. We have conducted a comprehensive review of alloptions available to the business in this challenging environment. It hasconfirmed that consolidating manufacturing in Mallow is a necessary step tosecure the survival of the Irish beet growing and sugar processing industriesfor the benefit of all involved. "It is also clear from our review that we must act immediately. Since theinitial reform proposals were published last year, the viability of sugarproduction in Ireland has been questioned, which, in turn, has encouraged largerEuropean competitors to target our customers. This consolidation illustratesour determination to be a competitively priced producer of sugar. Furthermore,whilst the initial reform proposals are likely to be modified, inevitablereductions in quota make the move to one manufacturing facility unavoidable." 12 January, 2005. CONTACT: PATRICK KENNEDY TELEPHONE +353 1 605 1003 FAX +353 1 605 1103 This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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