Reox Holdings removes chief executive and axes position

REOX HOLDINGS, the owner of Breeo Foods, has removed its chief executive Jerry Henchy and axed the position.

In a statement, the board of Reox, the holding company spun-off from the Dairygold co-op, said it had “decided to implement a number of cost-saving measures” as part of an ongoing restructuring within the Reox group and in light of the economic downturn.

“Resulting from this decision, the position of chief executive, together with a number of other positions, are to be made redundant.

“The board is satisfied that the duties of those being made redundant will be absorbed within the revised management structure,” the statement said.

Finance director Peter O’Donoghue will remain as an executive director of Reox, while Richard O’Leary continues as company secretary.

The removal of Mr Henchy from Reox follows the surprise termination of his contract to provide “chief executive services” to Dairygold.

Mr Henchy was told in January that these services to Dairygold were no longer required and that Dairygold would be seeking a separate chief executive.

He had been in charge of Dairygold for five years, having joined the co-op as chief executive in 2003 from Kerry Group. Under his tenure, Dairygold underwent a significant restructuring, with staff numbers cut from more than 3,000 to 900.

Mr Henchy’s departure was welcomed by local Cork East Fianna Fáil TD and Dairygold shareholder Ned O’Keeffe, who had frequently clashed with the former Dairygold chief executive over the direction in which he was taking the agri-giant.

Mr Henchy spun off its consumer foods, property and DIY retail interests into Reox Holdings in 2006. Dairygold, which provided €33 million in foundation money to Reox, has a 25 per cent shareholding in the company and four farmer-directors are on the Reox board. The rest of Reox’s shares are largely owned by farmers.

However, the fortunes of Reox suffered as the Irish property market collapsed and trading at its chain of DIY and homeware stores, 4Home, weakened as the housing market became subdued. Volatile raw material prices and lower consumer spending also hurt revenues at its food business.

Reox made a pretax loss of €9.1 million for the year ended September 30th, 2008, compared to a pretax profit of €20.6 million the previous year. Its net debt as of September 30th was €148 million, including the €33 million from Dairygold.

The High Court is expected to rule today on Kerry Group’s appeal against the Competition Authority’s blocking of its bid for the Irish business of Breeo Foods.

Kerry launched an acquisition bid for Breeo Foods Ireland, the owner of grocery brands such as Dairygold, Shaws, Galtee, Mitchelstown and Calvita, in January 2008, but it was rejected by the Competition Authority in August 2008.

If the Competition Authority’s ruling is overturned, the deal will bring Breeo’s portfolio into the same stable as Denny, Charleville, Dawn, LowLow and a range of other brands owned by Kerry.