A five-month contribution from the Wellworth SuperValu stores in Northern Ireland helped elevate pre-tax profits at Musgrave Group, the food and grocery distributor, to a record £28.5 million last year, a 12 per cent increase on 1996.
Chairman Mr Hugh Mckeown described 1997 as "an outstanding year" for the family-owned group which acquired the 21 Wellworth supermarkets in Northern Ireland last August and also invested more than £20 million to establish Ireland's first and only distribution network for chilled, fresh and frozen foods.
Turnover rose to a record £983.4 million last year, an increase of 15 per cent, and should top the £1.1 billion mark this year, the company said. Managing director Mr Seamus Scally said current trading was buoyant and was some 10 per cent ahead of last year, once the affect of the Wellworth acquisition was stripped out. Despite the high level of capital investment planned in the current year, the company expects profit levels to be similar to last year's in 1998.
Musgrave, which employs 2,100 people directly in Ireland and Spain, operates a cash and carry business from nine locations and also owns the franchise for 193 SuperValu and 268 Centra stores. It says its customers hold a 22 per cent share of the Republic's grocery market while Musgrave accounts for 45 per cent of all wholesale grocery sales in Ireland.
But despite its size, Mr McKeown said the 120-year old company was determined to remain private and would not seek a stock market listing. Neither was it available for takeover by a foreign company.
"We may behave like a public company in certain ways but we are absolutely committed to remaining a private company," he said.
Musgrave plans to continue to develop its business in Ireland, both North and South, although the bulk of the expansion will be Northern Ireland where the company believes it can grow market share from 10 to 15 per cent over the next five to seven years.
It expects to add 10 SuperValu and 35 to 40 Centra stores in the Republic in the next few years but is aiming to have 50 SuperValu and 70 Centra stores in Northern Ireland compared with a total of 32 stores at present.
It is spending £25 to £30 million on rebranding the Wellworth stores as SuperValu stores, £10 million of which has already been invested. It also plans to move them into independent ownership over the next two to three years, having sold the first one last week.
In addition to developing its Irish business, Musgrave plans to pursue further acquisitions overseas. It already owns a Spanish wholesale and retail distribution business and is currently looking at the option of putting SuperValu into Spain, where it has already registered the name and is planning a number of pilot stores.
Musgrave has also conducted extensive research in Poland, a market the company believes is similar to Ireland in many respects. It has a strong independent sector as Poland's 40 million consumers have historically been serviced by small shops. The market is also very under-developed which should provide plenty of opportunity for Musgrave, Mr Scally said.
The company is also keeping a close eye on the British market where the independent sector remains weak although it believes that prices there are too high at present and it would cost too much to get a foothold. "The plan is to be prepared to enter the UK market when the time is right and that could be any time in the next three to five years," Mr Scally said.
