Green Isle Foods, the frozen pizza subsidiary of Northern Goods, is to invest £35 million in an expansion of its Goodfellas pizza plant in Naas, creating 190 new jobs. This will bring the total number employed by Green Isle in Ireland to 950 and to a total of 1,000.
The news of the £35 million investment came as Northern Foods reported that Irish operations, which includes Batchelors as well as Green Isle, performed well last year, with sales and operating profits well ahead of the previous year. But when the Irish figures are converted into sterling, sales and operating profit actually fell.
Northern does not formally break down the contribution from the Irish subsidiaries in the profit and loss account, but they account for the vast bulk of the "other Europe" sales and operating profits that are contained in the notes to the accounts.
Sales from "other Europe" fell from £162.5 million sterling to £153 million sterling with operating profits down from £15.9 million sterling to £15.1 million sterling. But sterling rose by over 13.5 per cent against the pound between 1996/97 and 1997/98, with the most recent results converted at a sterling/pound rate of £1.122 compared to £0.988 the previous year.
Assuming that the bulk of "other Europe" figures come from Ireland, and adjusting for the shift in exchange rates, it seems that sales, when expressed in pounds, rose from £160.6 million to £171.7 million with operating profits up from £15.7 million to £16.9 million. In effect, the shift in exchange rates cost Northern £2 million in operating profits.
In his statement with the results, chairman Mr Chris Haskins said that Batchelors increased its market share in baked beans, but that the highlight of the year was strong sales growth by Squeez fruit juice following its relaunch in new one litre packaging.
Goodfellas frozen pizza increased its share of the British market while Donegal Catch performed well in Ireland despite increased competition from British suppliers.
Total pre-tax profits at Northern for the year to March 31st were £130 million sterling against £128 million sterling in the previous year, while turnover slipped from £1.88 billion sterling to £1.83 billion sterling.
But stripping out the Express Dairies business, which demerged from Northern at the beginning of the year, the remaining food group saw sales steady at £1.1 billion sterling and pre-tax profits down by £4 million sterling to £85.7 million sterling.
Express Dairies has said it expected to find a merger partner within the next year. Chief executive Mr Neil Davidson said: "Consolidation would seem to be the obvious way forward. We are talking about efficiency gains rather than market power, realistically given our size, our option would appear to be a merger hopefully within the next 12 months.
Avonmore Waterford is seen as an unlikely merger partner for Express but there has been regular speculation that the Irish group could become involved in a rationalisation of the British dairy industry through swapping assets with some of the other major producers.
The results from Express are the latest in a series from British dairy companies and continue the trend of better performances mainly due to lower raw material prices. Express, Unigate and Dairy Crest have all spoken positively in the past week of better margins in the liquid milk and cheese operations, margins which should also benefit Avonmore Waterford with its extensive UK cheese and milk operations.
In its first set of results since being demerged from Northern, operating profits rose from £44.8 million sterling to £62.5 million while pro forma pre-tax profits from £54.8 million.
