Greencore shares jumped yesterday on news that it is redevelop its 333-acre former sugar factory site in Carlow as the first step in a move into development. The company surprised the market by saying it planned to carry out the project itself rather than seek a partner.
The company's development director Mr Geoff Doherty said the convenience foods and agribusiness group wanted to maximise its return on the €1.1 billion project and the best way to do this was not to take on a partner.
"Greencore will take 100 per cent of the risk," he said, adding that the project had the potential to create an earnings stream for the company that would continue for years. Greencore shares closed up 1.2 per cent at €4.10 on the Dublin Stock Exchange, where shares traded in decent volumes.
Greencore Developments Ltd, headed by Maurice FitzGerald, Greencore's property director, will oversee the project, making use of internal and external expertise. Mr Doherty said the Greencore group had 900 acres of surplus property and that during the past 12 months it had been developing its property business.
"Like a lot of large Irish corporates we have found that, the way property has gone, it's impossible to ignore it," he said. "It is a nice business that we can develop as a division within Greencore."
Plans for the development of Greencore's 380 site in Mallow, Co Cork - another former sugar factory - are at a very early stage, he said. The company vacated the sugar factory in Mallow last May, while the plant in Carlow had been closed for a year and a half.
The group also has a 123-acre site in Little Hampton, in west Sussex, but it would be a few years before the group had a better sense of what it planned to do there, he said.
Mr Doherty said Greencore had "never given any thought" to selling the Carlow site. "Our job is to make money for our shareholders and we believe this is an opportunity for Greencore to participate in property."
Greencore had taken a significant hit to its earnings as a result of its exit from the sugar trade. "We won't replace it but we could get some of it back from property," Mr Doherty said. He added that the Carlow Gateway project would probably take five to eight years to complete. He said that the group did not have an expected return on its investment in the project.
While the company had not made a final decision on the matter, the most likely plan was that it would develop the site itself. Mr Doherty mentioned DCC and Glanbia as other Irish companies that had taken on property projects. He said that developer Liam Carroll, who has a 21 per cent stake in Greencore, had no involvement in the company's plans for Carlow. Mr Carroll was not consulted at any stage, he said.
One analyst who did not want to be named said property development was not Greencore's forte and he would have expected they would take on a partner.
