Hibernia Foods to close ready meal factory

Ireland's Hibernia Foods is to close one of its ready meals and cake production facilities in the UK in a bid to improve profitability. The company expects savings of up to €8 million a year as a result.

Hibernia Foods, the Irish ready meals and baked goods company, is to close one of its UK production facilities and consolidate production at its five other sites.

The company said that the ready meals and cake manufacturing facility in Bristol would be closed during the second quarter of the fiscal year (which begins in April), and that the move was necessary to reduce the cost of manufacturing and improve profitability.

The Bristol site was acquired in 1998 when Hibernia Foods purchased the Entenmann's and Mr Brain's businesses from Bestfoods UK.

The company said that it would transfer production of 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 the company's other existing locations.

Commenting on the closure, Oliver Murphy, chairman and chief executive officer 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. The company will take a one-time charge of €9 million to €12 million in the fourth quarter of the new fiscal year as a result of the closure.

Murphy added: "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."

Hibernia Foods is a leading European manufacturer of branded cakes, branded and private label ready-meals and branded and private label frozen desserts. 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.