AVONMORE Foods has made a strong recovery after its profit setback in 1994. Last year, it increased profits by over 47 per cent to £32 million. The results were marginally ahead of forecasts and Avonmore shares dealt up 5p to 140p, their best level for almost a year.

After the setback in 1994 when Avonmore closed down its Ger man red meat operations at a cost of £6.4 million, last year was an altogether better performance.

Turnover reached a record £1.23 billion and earnings per share rose over 54 per cent to 15.46p. Shareholders are to benefit by a 9.3 per cent dividend increase to 4.1p per share.

Within Avonmore's dairy business, weakness in the British operations almost cancelled strong profits growth in Ireland and the US. As a result operating profits were only ahead marginally at £24.8 million, even though sales grew from £657.9 million to £695.4 million. Margins in the UK are, however, improving and chief executive Mr Pat O'Neill noted that liquid milk prices increased last week.

Dairy sales in Ireland totalled £24 million while sales in Britain were £254 million. Within Britain, volume sales of pizza mozzarella from Golden Foods increased 30 per cent and Avonmore is now the biggest provider of pizza mozzarella in Europe.

The strongest recovery was in Avonmore's meat division, with operating profits up 50 per cent to £10.8 million even though sales fell to £412.3 million reflecting the Harzland closure in 1994. The Irish meat operations accounted for over two thirds of meat sales at £289 million and exports of pigmeat, beef and lamb through Irish Country Meats represented 78 per cent of sales. There was strong sales growth to retail multiples in Ireland, Britain and continental Europe - particularly France.

In Britian, sales in the meat business totalled £123 million, with much improved margins and 85 per cent of sales in value added form. Export sales expanded to the Far East with progress made in developing markets in Japan and Korea.

The agritrading division improved operating profits from £8.7 million to £9.3 million onsales up from £110.3 million to £117.6 million. Grain volumes increased to 130,000 tonnes and sales of animal feed and fertiliser were buoyant.

Avonmore's strong cash flow of over £50 million allowed the group to substantially reduce its gearing from 58 per cent to 40 per cent, with net debt down from £90.8 million to £70.3 million.

With strong cash flow likely to continue in 1996, Avonmore is in good financial shape for the aggressive expansion through acquisition signalled by Mr O'Neill.