IAWS to invest extra euro 40m in North America

Food and agribusiness group IAWS has announced plans to invest a further €40 million on expanding capacity at its North American bakery operations. The company, which reported a 21 per cent increase in first-half pre-tax profits yesterday, said the money would be used for the next phase of development of its facilities at Brantford in Canada and in New Jersey.

IAWS' joint venture with Tim Hortons, Canada's largest coffee and baked good chain, now supplies around half of Tim Hortons 2,360 outlets with product from the Brantford facility. The joint venture is expected to make its first profit contribution to the group in the second half of the year.

IAWS has received approval for a second phase of development at the Brantford plant and hopes that it will be completed by the end of 2003.

In the US, the company's New Jersey facility is also up and running and supplying artisan bread for IAWS' La Brea subsidiary. The company said the business was performing in line with expectations and production capacity would be significantly increased next year.

"Supplying demand is the biggest challenge we face," IAWS managing director Mr Philip Lynch said. Meanwhile, the company hopes to press ahead with plans to build a production operation in Britain over the next year.

That market is currently supplied from the Republic. According to Mr Lynch, plans to develop a bakery on lands in Staffordshire have been put on the backburner because of the US. "There's only so much you can do in a year," he said. "That remains very much on the cards. I would hope when we sit down here next year that we would have more than the foundations in place and more than a roof on the building in the UK."

The company is also hoping to capitalise on changes in the convenience store market in Britain following the entry of a number of big players such as Tesco and Musgraves into the sector.

A strong performance by its food businesses in Britain, Ireland and the US were the main factors helping IAWS to record profits before tax, exceptionals and goodwill of €27.6 million.

Turnover in the six months to the end of January was broadly unchanged at €571.7 million but when the impact of discontinued operations and currency fluctuations are stripped out, sales were up by an underlying 6 per cent.

The food business turned in an even stronger performance, with underlying sales growth of 11 per cent. But the company's agribusiness division had a tougher time with sales down by nearly 1 per cent in the period. This was mainly due to reduced sales in the UK fertiliser business which had a difficult first half.

Adjusted earnings per share rose by 23 per cent to 17.61 cents per share, ahead of the market's expectation of 18 per cent growth. The company said it would pay an interim dividend of 4.30 cents per share, a 15 per cent increase on last year.

Group borrowings fell by €63 million to €245 million over the period. Around one third of the group's earnings come in the first half and IAWS said it was confident of "another good result for the full year".