Greencore takes costs out

Greencore are rationalising their management structure by merging two of their food divisions. The Group's chilled foods division, which includes the large sandwich operation, is to be combined with the ambient and frozen division to from a single convenience foods division. This move reflects the tough trading conditions being experienced by all food companies serving the UK multiples. This new larger division will be headed up by the current group chief operations officer Tony Hynes, who will move to the UK to lead these two former Hazelwood foods operations. Before joining Greencore he worked with Green Isle here in Ireland.

The two existing chief executives of these divisions Ann Truelove, and Gerry Smith will be leaving the company. Ann Truelove was appointed to the board of Greencore just before Christmas last year.

With Greencore's financial year ending in September, changing the structure of their business at his stage will allow the synergies and benefits of this rationalisation flow through in the next financial year. Full year results from Greencore are due out in November, but at the half year stage the company clearly signalled the competitive pressures on the business and the efforts put in by the group to recover raw material price inflation.

Earlier in the summer the group took costs out of its malting business in the UK by closing some of its capacity at Carnoustie and Ipswich.

Greencore are not the only food company tackling its cost base in the UK. Just this week Northern Foods, which owns the Goodfella pizza business and Donegal catch operations in Ireland, announced that it was taking "robust action'' to reduce its costs and "remove duplicated activities''.

They too have made extensive management changes since March which involved simplifying their divisional structure and eliminating 30 senior management positions within the group. Northern Foods said that ambient and frozen food operations have made progress in terms of profits, but the profitability of some of the chilled operations remains unsatisfactory.

On the manufacturing side the company plan to close two factories at Evesham and Carisle. Northern Foods expect to incur an exceptional rationalisation charge of Stg£45 million in the current year. This is expected to yield annual savings of Stg£10 million by the financial year to the end of March 2006.