Foods group Glanbia plans to cut more than 700 jobs in the UK with the proposed closure of its cooked meats operations in Bradford and Milton Keynes.
The decision to close the plants and get out of the cooked meats business came as no great surprise, as this business has continued to make losses and was set to lose a contract with a major multiple next month which accounts for 30 per cent of its cooked meats production.
Glanbia chief executive Mr John Moloney said the cooked meats business had sales last year of £80 million sterling (€130 million) and lost £2 million sterling (€3.2 million).
Glanbia has signalled for some time its unhappiness with the performance of the cooked meats business and said last March, when it announced its 2001 results, that it was carrying out a strategic review of the business. At the time analysts speculated that the business night be worth about €30 million, but the strategic review and the effective "for sale" on Glanbia Cooked Meats failed to produce a buyer.
Mr Moloney said the group had looked at various options before deciding that closure of the business was the only option. "We looked at altering the cost base, we looked at a sale, we looked at the 30 per cent overcapacity and the squeeze on margins but when we looked at the continuing losses we decided there was no option but to close," he said.
But it seems the final deciding factor was the loss of a major contract with a British multiple which accounted for 30 per cent of production or sales of £24 million sterling. Mr Moloney declined to say which multiple was involved.
The closure of the business will result in an exceptional loss of €65 million in the 2002 accounts although most of this involves the writeback of goodwill previously written off (€38 million), assets write-offs and cash closure costs.
Glanbia has been in the cooked meats business in the UK since 1990 when it bought Ashmount Foods but expanded in 1987 with the acquisition of Beni Foods.
This is Glanbia's second major withdrawal from the British food industry. Three years ago, it exited the British liquid milk industry when it sold its dairy business for €152 million.
But it still has extensive food businesses in the UK and all of these are trading profitably.
