Greencore claims to be one of the largest producers of malt for the brewing and distilling industries in Europe, and has operations in Ireland, the UK and Belgium. Malt is said to account for 60 per cent of its turnover in ingredients. Its other ingredients businesses are Trilby Trading (vegetable oils and fats), Drummonds (grains) and Premier Molasses. Turnover for the Ingredients and Related Property in the year ended September 28 was up 21 per cent to €334m, and a positive contribution was made by all businesses in the division. Operating profits were up 372 per cent, to €26.6m. This was almost to the level of 2006 pre-tax profit of €27.6m, which included €22m of pre-tax sugar profits. Malt recovery The company has attributed this positive result to recovery in the malt markets. In recent years, the global supply and demand balance has been off-kilter due to over-capacity. However lower malting barley sowings and difficult harvests in some markets has balanced out the market. Moreover, a company spokesperson told FoodNavigator.com in July that growth in the biofuels sector has led to a shortage of malting barley. Consequently, maltsters and brewers/distillers are now not so concerned about getting a good price as about ensuring security of supply, said Greencore. The company also took internal measure to address the supply-demand issues, however, in 2005 and 2006, such as closing its Ipswich, Carnoustie and Banagher maltings to reduce capacity by 115,000 for the UK and Ireland. "These changes have delivered a leaner, more efficient malt business model," said the company. Then, in 2007, Greencore launched some forward-looking initiatives in a bid to secure returns for the future. These included expanding maltings in Scotland to cater to greater demand for Scottish whisky, supporting brewers and maltsters in the developing world with its Global Maltings Service, and securing long-term partnerships with important customers on its home turf. Production across remaining assets rose by three per cent to 512,000 tonnes. The company is positive going forward, despite raw material challenges. Sugar exit The group has said it is close to finalising the issues surrounding its exit from the EU sugar market, following changes to the EU sugar regime. The cost of its exit has actually been less than expected, which led to a fain of €10.9m in FY2007. In addition, the group received its first package of EU aid, totalling €43.6m, but is still embroiled with the Irish government in a legal wrangle over its entitlement to its original full entitlement of €130.9m. Backdrop of the group The group as a whole reported operating profit of €85.1m (including exceptionals), up 11.3 per cent, and turnover of €363.9bn, up from €349.9bn last year. One drawback, however, was the performance of convenience foods in the second half of the year, which declined by one per cent in those six months. Operating profit for the year fell seven per cent for the year to €64.4m, with a 16 per cent decline in the second half. Sales are usually better in the second half of the year. This was attributed to "external factors", including poor summer trading and rising prices for raw materials including bread, flour, dairy, eggs, cooked meats, onions, glass, corrugated paper and PET. However the group says it has retained a strong market share position, and is confident of recovery in 20078.