Fruitfield makes profits of €4.6m

Food group Jacob Fruitfield made pretax profits of €4.6 million in the five months after it bought the Jacob's biscuit business in August 2004, new filings reveal.

The price paid by Fruitfield, €64.88 million, is also disclosed.

It was considerably less than the €100-€120 million range mooted at the time of the transaction by sources in the food industry.

The actual price that the then Fruitfield Foods paid to acquire brands such as Kimberely, Mikado and Fig Roll from French group Danone implied a multiple of eight times its pretax profit of €8.18 million in 2003.

While the company said yesterday that it will see the benefit in the future from sharing of overheads between the Jacob and Fruitfield units, chief executive Michael Carey warned of challenging market conditions.

He said the abolition of the Groceries Order "will lead to further pressures from strengthening consumers and potential instability" in a market in which it was hard to pass on increases in costs.

"Despite the progress made to date, we remain concerned about the future trading environment. We must continue to seek out opportunities to make this business more cost competitive and secure its future in that increasingly competitive marketplace."

Turnover in the five months to December 2004 was €42.39 million and its operating profit was €6.58 million before interest charges of €1.96 million on its net debt of €80.07 million.

The company said its profits were achieved in a period of high seasonal sales and were "not a meaningful measure of profitability of the group in a full year".

After buying niche jam manufacturer Real Irish Food Company last year, the company said it will continue to seek acquisition opportunities and move into new food sectors.

Mr Carey owns more than 57 per cent of group that originally bought the Fruitfield business from Nestlé in 2002.

The other investors are David Andrews and Michael Tunney of Lioncourt Capital and company finance director, Gerry Murphy.

Fruitfield brands include Little Chip and Old Time Irish marmalades and Silvermints. Jacobs brands include household names such as Cream Crackers and Coconut Creams.

The accounts reveal that Fruitfield was not profitable in the period immediately before the Jacob's deal and turned a pretax loss of €491,000 on sales of €13.9 million in the seven months to August 3rd, 2004.

The then Danone subsidiary W&R Jacob had a pretax profit of €3.49 million on sales of €34.9 million in the same period, although the profit was enhanced by an exceptional gain of €2.42 million.

The accounts show that Jacob Fruitfield realised significant paper gains on the revaluation of freehold lands and machinery held by W&R Jacob and Fruitfield at the time of the deal.

The value of Jacob assets worth €17.7 million was revised upwards by €22.17 million to €39.88 million by CB Richard Ellis Gunne, Lisney and King Sturge, while Fruitfield assets worth €19.07 million were revalued up by €3.26 million to €23.33 million.