Irish group Greencore is now down to 4,300 suppliers from 6,000 18 months ago, with the likelihood of a further reduction under its Total Lowest Cost cost-cutting programme.
The group said the programme was contributing to a 2% per year cut in operating costs in its convenience foods division, whose bakery products include cakes, desserts, quiches, Yorkshire puddings and sandwiches. There was a 50% or E2.5m increase year-on-year in energy costs in the division in the six months to the end of March, corresponding to 0.5% of sales.
However, Greencore said that its cost-cutting, along with “a strong flow of new products”, helped the division to boost operating profit by 2.2% year-on-year to E30.3m in the six months to the end of March, on sales 8.1% higher at E441.7m.
Convenience foods accoun-ted for 72% of operating profit in the six months compared with 25% in 2000; the ingredients division’s share has fallen following restructuring of its malt business.
Greencore said that when it has stopped sugar processing in Ireland next year, because of the revamp of the European Union’s sugar support regime, the convenience foods division will produce about 85% of group profit.