Greencore Group, the Irish maker of sandwiches and malt, has had a tough year due to unseasonal summer weather, consumer slowdown, strong raw material inflation and a weak exchange rate, said chairman Ned Sullivan.
The convenience foods division, including sandwiches, quiche, cakes and desserts, performed well in the first half of 2007, but profit declined by 16% in the critical second half, according to the company’s interim management statement last week. On a full-year basis, turnover in the division rose by 4% to €933.1m and operating profit fell by 7% to €64.4m.
Managing significant food inflation has become a "key challenge for all players" in the global food industry, said Sullivan. "Our convenience foods division has been successful in working with customers to offset this impact - estimated to total 8-10% of our cost of goods."
Overall group operating profit will be hit by a weakening pound. "If the Euro/Sterling level were to continue, the translation effect year-on-year would reduce group operating profit by around €8m, and profit before tax by around €6m," added Sullivan.
The ingredients and related property division delivered operating profit of €26.6m, an increase of 372% over the previous year. The key driver was the strong recovery in its ingredients businesses, said Sullivan.