Greencore shares fell sharply in Dublin yesterday, despite results in line with market forecasts.

In heavier than usual trading, Greencore fell as low as €2.35 before closing down 5 per cent, or 13 cents, at €2.45.

Greencore is in the process of making its biggest acquisition, the £258 million sterling (€426.7 million) bid for the British convenience foods group, Hazlewood Foods.

This was a "step change" for Greencore and would accelerate its transformation into a group focused on added-value convenience foods, said chief executive Mr David Dilger.

The market had expected a flat year from Greencore due to a decline in sugar profits and weakness in the malt market.

While the group's food business performed well, overall pre-tax profits before excep tional charges fell from €74.3 million (£58.51 million) to €70.6 million despite a 5 per cent rise in sales to €906 million.

Mr Dilger refused to comment on reports that Greencore and IAWS had had preliminary discussions on an alliance between their flour-milling operations. It had been reported that IAWS had gone off the idea of spending £20 million on a flour mill in Dublin and wished to take an equity stake in Greencore's milling business.

Greencore is the biggest flour miller in the State, with about 50 per cent of the market. Mr Dilger said the flour business had suffered from low-price imports, which had dragged down the performance of the food business. "Flour needs to do better," he said.

The food business, now the biggest of Greencore's operations, had a better year with pizza and sauces. Malt operations, however, are set for a significant improvement and Mr Dilger said: "We're much more optimistic about malt and the improvement will be under pinned by a poor barley harvest in France."

Overall, food operating profits were up 0.6 per cent to €36.2 million. Sugar operating profits fell almost 8 per cent to €33.7 million, mainly due to changes in the EU sugar regime and price pressure in the retail side of the business. Agribusiness improved operating profits by more than 8 per cent to €10.2 million.

The results include an exceptional write-off of €63.3 million, mainly against investments in the US sugar group, Imperial Holly.