Farsons Group yesterday reported pre-tax profits of €3.2 million for the year ended January 31, 2010, up by €2.4 million over the previous year.
Group turnover declined marginally by two per cent from €66.4 million to €65.1 million.
The improvement in group operating profit was "the result of the group's determined efforts to attain targeted production and distribution efficiencies emanating from the major capital expenditure programme undertaken in 2006-2008, the continuing focus on the containment and reduction of operating and administrative costs, and the implementation of its declared strategy of divesting itself from loss-making operations".
More effective sales and marketing strategy, decreases in the cost of raw materials and some one-off charges on old plant and early retirement charges attributed to the results.
The directors are recommending a record total dividend to the ordinary shareholders of €1.8 million at the annual general meeting on June 24, of which €300,000 has already been paid by way of an interim dividend in October 2009.
Farsons said all four business segments improved their profitability, with the brewing production and sale of branded beers and beverages' segment reporting a marked increase of €1.3 million in contribution to profits compared with the result from the segment for the prior financial year.
Group indebtedness decreased considerably compared to the previous financial year figure to €38.5 million from €44.0 million. Earnings before interest, tax, depreciation and amortisation for the year amounted to €10.2 million, an improvement of a little over €2 million for the year. The gearing ratio (the ratio of debt on equity and debt at year end) stood at 31.4 per cent, also an improvement over the previous year's 34.8 per cent.
Directors said the general economic uncertainty and further competitive activity presented sustained challenges for the group. Higher utility costs will continue to put pressure on overheads, and cost containment right across the group remains a priority for management, principally managed through increased productivity and reduced overhead costs. The beverage importation arm has strengthened its portfolio through the recently secured representation of Red Bull.
Preparatory work on the €14 million investment in a new brewhouse and water treatment facility are at an advanced stage, and civil works are expected to begin in July. When completed, this project will totally free up the façade of the brewery for eventual further re-development in due course.
The company has submitted an application to the Listing Authority for the approval of a bond issue amounting to €15 million, earmarked for launch in May, subject to regulatory approval. The proceeds will be used to finance a bond exchange programme for the 6.6% SFC Bonds 2010-2012 due for redemption in November 2010, and for the group's general financing requirements, including the construction of the new brewhouse.