IAWS results beat expectations with 17% rise in pre-tax profits

A strong performance from its food division helped IAWS to record a 17 per cent rise in full-year pre-tax profits before exceptional charges of €70.3 million.

The results, which were slightly ahead of market expectations, showed turnover at the food group was up by 10 per cent to €1.2 billion while total operating profit rose by 16 per cent to €84.9 million.

Growth was driven mainly by IAWS's food division which now accounts for more than 50 per cent of turnover and 60 per cent of operating profits. Sales in the division rose 20 per cent to €637 million in the year to July 31st, boosted by a first full-year contribution from the Los Angles-based La Brea bakery business in the US.

The company said construction of a new production facility for La Brea in New Jersey was completed during the period and should be fully operational by the end of October.

IAWS expects to reap the benefits of the new facility in the current year.

Meanwhile, construction of a €90 million joint-venture facility to produce baked goods for the Tim Horton's sandwich and doughnut chain in Canada has also been completed.

The plant should be in full production by mid-December or early January.

"It will report positive earnings in 2003 but really kick in in 2004," IAWS managing director Mr Philip Lynch said.

"The combination of La Brea in the US and the Tim Horton's alliance in Canada offers enormous potential," he said.

IAWS's original agri-business and nutrition division had a more sluggish performance, with sales rising by just 1.3 per cent.

Mr Lynch conceded that, as the food division grows, this business would play a less important part in the group but said IAWS had "no desire to turn our back on it".

The company announced a final dividend of 7.86 cents per share, an increase of 15 per cent.

The results included an exceptional loss of €2 million relating to the closure of the Bolands flour mill and the sale of two non-core businesses in Britain.

Analysts welcomed the results, describing the outlook for the group as buoyant.

Company broker Davy believes that an earnings per share target of 50 to 60 cents now looks achievable in the current year.

IAWS shares gained 20 cents to €8 in the wake of the results but later slipped back slightly to close at €7.90.