Healthy growth at Musgrave sees profits jump 20%

Profits at Musgrave Group jumped 20 per cent after tax last year to €51.5 million on the back of record turnover of €3.76 billion.

The symbol retail franchise operator and wholesaler reported healthy growth in sales at its SuperValu and Centra chains in Ireland. It also reported progress in integrating its £60 million acquisition of Londis in the UK.

"Musgrave Group has had another successful year with record levels of sales, profits and dividends against a backdrop of an increasingly challenging and competitive environment," said group chairman Hugh Mackeown. However, he noted that the trading conditions were "increasingly challenging".

At the operating level, group operating profits were 7.4 per cent ahead at €104.5 million. The company is raising its dividend payment by 20 per cent to 24 cent per share.

Chris Martin, who succeeded Seamus Scally as group chief executive last month, said the group's SuperValu Centra division, comprising 535 stores across the State, had performed strongly with "an increase in sales by its retailers of 6.3 per cent to €2.7 billion in a market which saw food prices continuing to fall".

On a like-for-like basis, sales rose 5.4 per cent, he said, with a strong performance in the second half of the year, which has continued into 2005.

The group spent €180 million on upgrading existing outlets and establishing new ones in 2004. It also pumped €35 million into a new distribution centre in Kilcock, Co Kildare.

Musgrave added eight stores in 2004 and plans to open a further 20 outlets this year.

Mr Mackeown said the acquisition of Londis had given the group the ability to establish a business across Britain.

Mr Martin said Musgrave was looking to replicate its successful Irish model in its growing overseas operations.

Having won the protracted battle for Londis, Musgrave has merged its 2,165 stores with its existing Budgens operation in Britain. This division reported sales of £1.5 billion for the full year.

Mr Martin said the British operation "will now need to be supported by a major programme of investment in supply chain and systems, which will take several years"

The group has started selling its Budgens stores to retailers. By year end, 72 of the stores were franchised with 165 still in Musgrave hands.

On the wholesale side, encompassing food service, retail distribution and cash & carry operations, the group emphasis in 2004 was on growing its presence in the food service sector with a number of acquisitions.

Net debt fell €12 million to €383 million despite spending on acquisitions.