Fitzwilton's final losses exceptional

In what is probably its last set of results as a public company, Fitzwilton has reported a loss of £7.6 million for 1997, compared to profits of £15.1 million the previous year.

No comparisons should, however, be made between last year's figures and the previous year's. The Fitzwilton at the end of 1997 is a totally different company from 1996, following the major restructuring of its Wellworth supermarket interests in Ireland and the formation of the retailing joint venture with Safeway.

The 1997 figures also contain various once-off items. These include: a profit of £27.1 million on the sale of the Wellworth assets to the Fitzwilton/Safeway joint venture company and to Musgrave; a write-off of £5.5 million reflecting its share of Waterford Wedgwood's exceptional loss; and a goodwill charge of £33.7 million as a result of writing off goodwill in the profit and loss account rather than against reserves, as had been the case.

But at the operating level which mainly involves Wellworth and the Renicks manufacturing operation Fitzwilton suffered a sharp drop in operating profits from £17.8 million to just under £11 million.

With sales down from £319.7 million to £233.1 million, operating margins fell from 5.6 per cent to 4.7 per cent. Fitzwilton's share of associated company profits mainly Waterford Wedgwood was £6.2 million.

The various exceptional items resulted in profits before interest of £5.1 million with interest charges of £12.7 million bringing the loss before tax to £7.5 million. Fitzwilton did, however, substantially improve its balance sheet during the year, with net debt falling from £131 million to £82 million and shareholders' funds rising from £33 million to £55 million.

Chief executive, Mr Kevin McGoran, said the progress of the joint venture with Safeway had been somewhat slower than expected. He was unable to say when the joint venture would have its first supermarket in the Republic, citing legal constraints associated with the proposed buyout by the O'Reilly/Gouldandris group. Fitzwilton/Safeway have previously detailed plans for a chain of 10-15 superstores in the main Irish urban centres costing up to £200 million.

Current trading continues to be affected by the restructuring of the Wellworth business and sales are running below the level prior to the establishment of the joint venture, Mr McGoran said.

The £135 million formal offer by the O'Reilly/Goulandris group to buy out the remaining shareholders at 50p a share is expected to be sent to shareholders next week. As a result of the pending offer, Fitzwilton has decided not to pay a final dividend.