Irish food and sugar producer Greencore expects its convenience foods division will drive further growth in 2007, despite recent raw material cost increases and an electrical fire at its largest sandwich facility, Manton Wood.

The fire happened in December 2006, when a switchboard failed and blew out all the power, meaning the site was unable to produce for a few days.

The division also continued to face strong inflationary pressure on raw material pricing, chairman, Ned Sullivan told the Greencore annual general meeting last week.

Sullivan said: "We are aggressively pursuing a broad set of Total Lowest Cost, product innovation, pricing and new channel initiatives to offset these impacts and deliver on our expected growth."

The convenience foods division, which accounted for 92% of the group’s continuing operating profits in 2006, saw sales up by 8.3% and operating profit up by 5.7%, he said. Margins were broadly maintained (7.7% in 2006 versus 7.8% in 2005) despite divisional energy cost increases of more than E5 million year-on-year.

But the new EU sugar regime, announced in November 2005, posed an insurmountable challenge to profitable sugar beet-growing in Ireland, Greencore said. The group responded with an early commitment to exit sugar production and a strong defence of its entitlement to restructuring aid under EU law.