Dublin / IE. (iaws) The Irish IAWS Group PLC warns that food price inflation would impact on the trading environment for all food companies. However, it expressed confidence that its move into the huge US market would help it to continue delivering above average growth. The group has reported a 16 percent rise in pre-tax profits to 143 million Euro for the year to the end of July with sales up 22,5 percent to 1,9 billion Euro.
Chief executive Owen Killian warns that food inflation is being fuelled by a rapid rise in grain prices. However, he is hopeful that the group will continue to generate above average growth, thanks to the US market and its largest ever acquisition, the 460 million Euro purchase of «Otis Spunkmeyer» (OS).
The group says that its ongoing investment programme in North America has given it both scale and reach with unrivalled access to markets. The OS deal and ongoing capital investment in the US has helped create an operation of substantial scale. During the year, IAWS attained a five percent share of the twelve billion USD value added bakery market. Superior brands in artisan breads and sweet baked goods are particularly important as these categories are enjoying strong growth. Indeed, IAWS estimates that artisan bread sales are rising at a rate of eight percent a year.
In the year to July, sales in the US jumped 165 percent to 369 million Euro with OS providing 220 million Euro of this in the nine months for which it is included. Sales are now running at an annualised 600 million USD in North America, where the La Brea bakery continues to generate strong growth in revenues – up by 15,2 percent to 149 million Euro and in profits, up 17,8 percent to 19,6 million Euro. Revenue in the European division, including the Lifestyle Foods businesses in Ireland, the United Kingdom and France, increased by 7,9 percent to 649,1 million Euro and profits by 10,1 percent to 66,6 million Euro.
IAWS says the European bakery market is worth 90 billion Euro, with value added products accounting for 13 billion Euro of this.
To further underpin this growth, the Lifestyle Foods business is currently constructing a new world class facility at Grangecastle, Dublin (IE). Building work has commenced on the site and 53 million Euro was invested in the project during the past twelve months. According to IAWS the commissioning of the facility will commence at the end of the current financial year and the benefits from this investment will be delivered from 2009. The spin-off of the original business company, now an associate business, has generated 256 million Euro in cash (results presentation).
