Food group Greencore reported a 38 per cent increase in pre-tax profits to €35.4 million for the half year ended March despite higher operating costs, writes Ciarán Brennan.

Group turnover was 11 per cent stronger at €632.7 million, while operating profit was up 24 per cent to €40 million on the back of a strong performance by its convenience foods division, which now accounts for 80 per cent of operating profit.

The company also said it was in advanced talks to expand its convenience food operations into the United States although chief executive David Dilger declined to say when a decision would be made to enter the US.

"The opportunity is that the industry doesn't exist in the US at the moment," he said.

"It would need investment by us, significant investment in the supply chain and in the stores. The industry has to jump together to make this work. It would represent undue risk for our shareholders if we didn't jump together. But we are confident we will be able to embark on this," he added.

In its first results following the full termination of the Irish sugar processing business, Greencore said turnover at its convenience foods business was up 8.2 per cent to €478 million, driven by strong market share growth at its sandwiches, prepared foods, mineral water and continental businesses.

"It is more than double the market growth rate and it was delivered organically," said Mr Dilger.

Operating profit, at €31.8 million, was up 5 per cent with strong trading performances across most of its categories compensating for ingredient, packaging and labour inflation, as well as for the negative impact of a fire at its largest sandwiches facility in Manton Wood in early December.

First half margins, at 6.9 per cent, were maintained broadly in line with last year's figure of 6.7 per cent despite continued sales price deflation and increased investment in sales and marketing.

Sales to the non-multiple sector grew by 15 per cent to €158 million and now represent 33 per cent of its convenience foods business. Mr Dilger said the company aims to grow this to 40 per cent.

There was a significant recovery in its ingredients, agribusiness and related property businesses with operating profits of €8.2 million, a rise of 305 per cent from what the company said was an "unsustainably low" level in 2006.

Turnover rose by 19.5 per cent to €155 million, helped by a recovery in its malt business.

Net financing costs were reduced from the first half of 2006 by 32 per cent to €5.4 million. Continuing adjusted earnings per share were up 32 per cent to 12.1 cent, the company said.