The Farsons Group has announced a significant improvement in its profit for the financial year ended January 31, 2012. Group turnover increased by five per cent to exceed €70 million and profit before tax exceeded €5 million compared to €4 million in the previous financial year, an increase of 25 per cent.

Farsons CEO Norman Aquilina stated that despite increased competitive pressures the group managed to increase its turnover by over €3 million, partially as a result of an increase in exports’ turnover. Nonetheless, he said increased competition and the rising costs of raw materials had eroded margins. The selling, distribution and administrative cost ratio to turnover reduced marginally, resulting in a stable operating profit compared to the prior year.

The group’s earnings before interest, tax, depreciation and amortisation exceeded €11 million while the shareholders’ funds, at €88 million, finance 59.6 per cent of the group’s total assets. The gearing ratio, that is, the ratio of debt on the total debt and equity at year end remains strong at 27.22 per cent.

The directors also commented on the outlook for the new financial year, and highlighted the dependence of the group’s business on local consumer confidence and the state of the tourism industry. They said inflationary pressures on energy costs and increases in the cost of raw materials and imported products, particularly which are derived from agricultural commodities, continue to present challenges for the group. Nevertheless, the board of directors said it remains confident that the group’s robust business model can face these challenges.

The directors will recommend a total net dividend to the ordinary shareholders of €2.1 million at its AGM on June 20, of which €400,000 has already been paid by an interim dividend in November 2011.