Coyle sold €15m Largo stake to German snack firm
ENTREPRENEUR RAY Coyle sold a 15 per cent stake in his Largo Foods crisp-making business last year to Cologne-based food group Intersnack for €15 million.
Mr Coyle revealed details of the transaction to The Irish Times and said the German company might ultimately take a bigger bite of Largo, which makes Tayto, King and Hunky Dory crisps. "They want to buy some more shares at the same price but I haven't decided if I'll do that," he said.
Intersnack was formed in 1995 through the merger of two large snack food groups and is the biggest producer of salted snacks in Germany, including Chio and Funny-frisch.
Mr Coyle was commenting on Largo's 2007 results, which were filed recently with the Companies Office. They showed that the company's trading profit rose by 43.6 per cent to €7.4 million last year while its sales increased by 22 per cent to €90 million.
Largo was pushed into the red, however, by costs associated with its €62.3 million purchase of Tayto from CC in 2006.
Largo posted a loss for the year to the end of December 2007 of €7.2 million, compared with a deficit of €3.2 million in the previous 12-month period.
The Ashbourne, Co Meath-based business incurred a €4.3 million exceptional charge relating to the rationalisation last year of the Largo and Tayto businesses, which resulted in 140 redundancies. It also took a €3.3 million goodwill amortisation charge relating to the Tayto purchase.
In addition, Largo spent €8.8 million on interest and other charges, mostly connected to the Tayto deal.
Mr Coyle said he was happy with current trading levels. "Our sales will be up about 6 per cent this year and our bottom line will be positive," he said.
He added that Largo was well positioned to ride out the recession. "We anticipate growth in the market in 2009," he said. "We think more people will be sitting in at home; they won't be out and about as much, and crisps are a relatively inexpensive item. It's comfort food."
Mr Coyle said he was happy with the Tayto deal, which has left his company servicing a debt of about €78 million. "I've no regrets. It gives us scale and volume. We always reckoned it would take two years to turn it around and consolidate the businesses."
Mr Coyle said Largo would continue to monitor its cost base given the economic downturn. "We're continuing to look at ways to cut more costs. We're trying to get more benefits from our buying."
He said Largo would spend €9 million this year on marketing. "We'll be leaving that alone," he explained.
Mr Coyle hopes to expand business in Britain, where he has a small manufacturing plant in Barnsley employing 60 people.
"We would like to expand our sales in the UK next year," he said.
Mr Coyle is also looking at launching Tayto into Libya and has signed a 50-50 joint venture with a local company. "I'm going there in a few weeks . . . there's an opportunity there. I think Tayto could do well in North Africa."