Greencore adds €5m to bill for Carlow sugar site clean-up
Convenience food manufacturer Greencore has set aside an additional £4m (€5.1m) to remediate its former sugar site in Carlow, bringing the total bill for rehabilitating its two former plants to about £25m (€32m).
But chief executive Patrick Coveney said that he expected all the work will be completed by the end of the year - a decade after sugar production in Ireland dissolved.
The total bill also includes the clean-up at the former Mallow production site in Co Cork, and the cost involved in demolition as well as soil decontamination and other measures.
Greencore said yesterday it had made an extra £4m provision in its accounts for the Carlow site, and that the rehabilitation process was taking much longer than anticipated because of strict requirements set down by the Environmental Protection Agency.
The Carlow site originally extended over about 300 acres, and parts of it are already in use again.
But Mr Coveney said that up to 80 years of sugar production on the site meant that parts of the land that would most likely be used for residential construction at some point in the future required intensive treatment.
Greencore noted in its 2010 annual report that it expected substantially all the site remediation related to its exit from sugar production to be completed by the end of 2011. Rehabilitation of the Mallow site was substantially completed that year.
Greencore shut its last remaining sugar production plant - in Mallow - in 2006, with the loss of 240 jobs, after the European Union restructured the industry. A later report from the EU's Court of Auditors found that closure may have been unnecessary because the EU had relied on out of date data.
The Carlow site was closed in 2005 by Greencore, and its rehabilitation is regulated by the EPA.
"As we've been trying to get the site ready for alternative use, we've had to do lots of work on the soil," Mr Coveney told the Irish Independent. "As we found problems that are related to the 70 or 80 years of production there, we've had to deal with them. Our view is that we're coming to the end of that process. This incremental cost will be the final chunk of cost that will be attached to that remediation."
Mr Coveney was speaking as Greencore reported a strong set of interim results, as it continues to capitalise on the demand for ready-to-go convenience food in the UK.
Its revenue in the six months to March 25 rose 7.5pc to £691.6m (€883.1m), while operating profit jumped 8.5pc to £43.5m (€55.5m). The company significantly outperformed the market for its products, which are sold by major retailers such as Tesco, M&S, and Sainsbury's.
Mr Coveney said that the company also plans to refinance $100m of private placement notes that fall due in October. In 2003, Greencore raised a total of $302m in the US via private placements.
"We'd expect to terminate that facility pretty quickly," he said, adding that it would be done before the end of the financial year in September. It's likely to involve another private placement.
"We've got plenty of support from the debt markets and the bank syndicate that we work with," said Mr Coveney.
"We're sufficiently financed that we could replace those maturing notes if we wanted. However, our strategy has been to combine different sorts of debt money."