Musgrave profits rise 5% to €72m

Profits at Musgrave Group increased by 5 per cent before tax to €72.5 million in 2005, with turnover at the retail franchise operator and wholesaler rising 17 per cent to €4.4 billion.

However, the increase in profits was lower than that recorded in 2004, which the grocery distributor said was due to an increasingly challenging trading environment.

"The results are good, but they also reflect the changes that the market has gone through in the last year," said group chief executive Chris Martin.

"Our retailers are trading in an environment of higher costs, increasingly diverse consumer needs and more time-pressed shoppers," he said.

Despite this, retail sales at its SuperValu and Centra chains in the Republic increased 7 per cent to €2.9 billion, out of total retail sales of €6 billion across the group's network of independent retailers in the Republic, the UK and Spain.

Sales at Centra convenience stores broke the €1 billion barrier for the first time, and franchise operators are extending fresh food offerings and adding juice and smoothie bars to its stores to satisfy growing demand for healthy eating options from consumers.

Mr Martin said it had been "business as usual" this year despite the abolition of the Groceries Order, which had been tipped to reduce prices.

He added that high inflation rates were pushing up suppliers' costs in the Republic, resulting in higher food prices for consumers, after a fall in prices last year.

The Musgrave group and its retailers invested €140 million on opening new stores and upgrading existing stores in the Republic, which Mr Martin said had held profits back.

At the end of the year, there were 374 Centra stores and 171 SuperValu outlets in the Republic. Musgrave said it anticipated that another 50 new stores would open in the Republic in 2006, including the five Pettitt's SuperValu stores that joined the group in January.

A further €40 million will be invested in opening new stores this year, Musgrave said, while €105 million will be spent on refurbishing and extending SuperValu supermarkets.