Hibernia Foods has said that it will close its ready meals and cake manufacturing facility in Bristol, UK, and relocate production to other locations.
The closure and relocations will be completed during the second quarter of the new fiscal year, which commences 1 April 2003. In addition to consolidating the number of food processing plants to five, the company says that it will be lowering its cost of manufacturing and profitability will improve.
The Bristol site was acquired in 1998 when Hibernia purchased the Entenmann's and Mr Brain's businesses from Bestfoods UK. The company says it intends to transfer production of the Entenmann's products to its significantly larger branded bakery in Bridlington, North Yorkshire, which produces Sara Lee bakery products. Production of the Mr Brain's line will be transferred to one of its other existing locations.
Commenting on the closure, Oliver Murphy, chairman and CEO of Hibernia, said: "Once the moves are completed, we expect a significant improvement in our gross margins during the second half of fiscal 2004. The incremental fixed costs associated with producing the Entenmann's line at the Bridlington site are significantly lower than continuing to operate a bakery dedicated solely to one line. Furthermore, we will maintain adequate capacity to deliver our revenue growth targets. In conjunction with the relocation of Mr Brain's, we also will be investing in new state-of-the-art machinery to further improve efficiencies, and hence, gross margins."
Hibernia expects the savings associated with the plant closure to be approximately €5 million to €8 million per year following the closure. An estimated one-time charge of €9 million to €12 million is anticipated, to be taken in the fourth quarter of fiscal 2003.
Murphy also stated: As we approach the end of our fourth quarter, I am pleased to report that I expect our revenues and profitability to be in line with our previously communicated expectations. We intend to provide further guidance in relation to fiscal 2004 in conjunction with our fourth-quarter earnings announcement in May 2003."
Hibernia Foods is a leading European manufacturer of branded cakes, branded and private-label ready meals and branded and private-label frozen desserts, headquartered in Dublin, Ireland, with significant manufacturing facilities in the United Kingdom. It is the exclusive European licence holder for Entenmann's branded sweet-baked cakes throughout all of geographical Europe, representing 52 countries and a population of over 700 million people and is the exclusive UK and Ireland licence holder for Sara Lee branded frozen desserts.