Jacob Fruitfield profits plunge 80% in 2010

PROFITS PLUNGED by 80 per cent to €2.2 million at biscuit and jam maker Jacob Fruitfield in the year before the company was sold to Valeo Foods.

Accounts posted at the Companies Office show exceptional and restructuring charges acted as a drag on the Dublin-based group in 2010, with these costs including €1.2 million relating to a review of the group’s “strategic options”.

A further €5.5 million in restructuring costs reflected issues in the group’s pension scheme.

The company saw its turnover fall by 11 per cent to €72.7 million in the 2010 calendar year, with its directors pointing to a “highly competitive” trading environment. They said the drop in sales reflected the “intensity of competition”.

When the charges combined with the difficult trading backdrop, pretax profits fell from €11.4 million to €2.2 million.

Shareholders’ funds at the end of the year were in deficit by €12.7 million.

It emerged in August this year that Jacob Fruitfield was being sold to Valeo Foods in a deal that would net Jacob’s owners roughly €30 million in cash.

The biggest beneficiary of the acquisition, which has since been approved by the Competition Authority, was Jacob Fruitfield’s chairman, Michael Carey, who owned just over half the company.

Mr Carey and Jacob’s other owners are, in turn, reinvesting in the enlarged Valeo by taking a 26 per cent stake.

Jacob Fruitfield was formed in 2004 and houses brands including Fig Rolls, Chef Sauces, Fruitfield jams and Silvermints. Most of the company’s production is now based overseas.

Valeo came into being last year through the merger of Batchelors with Origin Foods, which owned the Roma, Odlums and Shamrock brands.

Notes with the 2010 accounts show that Jacob’s existing debt will be repaid under the terms of the Valeo deal, and replaced by funding given by the new business.

Jacob Fruitfield had net debt of €32.8 million at the end of 2010, at which point it was in breach of one of its financial covenants. This breach has been waived in light of the Valeo deal.

“The group’s existing bankers are supportive of the proposed transaction,” the notes state.

The accounts show staff costs fell by 41 per cent to €4.4 million last year.