It said it has entered into a conditional agreement to sell its molasses interests for £15.6m (US$20.2m) to United Molasses Marketing, and United Molasses Marketing (Ireland) subject to customary working capital adjustments and the approval of the relevant anti-trust authorities.
The core activities of these businesses, Premier Molasses and United Molasses (Ireland), are the importing and distributing of animal feed across the island of Ireland. Those entities have storage facilities at Foynes, Ringaskiddy and Belfast and supply imported liquid feed ingredients to feed compounders across Ireland. Molasses are blended and mixed at each storage facility to meet the specific requirements of customers in the feed sector.
Molasses are important from an energy perspective in animal nutrition but are used also as a binding agent and for improving the taste of feed.
In the year ended September 2019, Greencore's interests in its molasses trading businesses represented £6m of its pretax profit. Net of all non-controlling interests, Greencore's share of profit after tax from these businesses came to £3.1m, according to financial media reports.
Analysts had long considered those assets to be non-core businesses.
Greencore said the proceeds of the sale will be used to further strengthen the group’s balance sheet. The FTSE 250-listed firm reported a 34% to £240m in the quarter to June 26 as lockdown hit the food-to-go industry.
However, the group said it saw “encouraging improvement” of demand in food-to-go categories through Q3 and into Q4, and said it is in a strong position as regards liquidity, to support the business in the near term and to build back as the Covid-19 pandemic eases.