Food group IAWS is considering financing options including a possible initial public offering (IPO) for the development of Origin Enterprises, the holding company for its agribusiness and property interests.
IAWS chief executive Owen Killian said the group would look at joint venture opportunities and private equity to finance Origin, which it spun off into a separate company last year. He said IAWS would not rule out an IPO for the business, which also includes nuts, seeds and dried fruits producer Shamrock Foods.
The management of Origin will take a 5 per cent stake in the company. IAWS intends that Origin will buy up other agribusiness companies over the next few years as the market consolidates.
"We think that there is momentum in that business," Mr Killian said yesterday, as IAWS announced half-year pretax profits of €56 million for the six months to the end of January, up 13.5 per cent.
The renewed focus on IAWS original feed and fertiliser agribusiness operations follows a period of almost a decade in which the company has concentrated on ploughing cash into its bread and pastries food divisions in Europe and the US. Mr Killian said IAWS had spun off the Origin business to avoid selling it. He added that the group hoped to "add value" to Origin's property holdings, which include 30 acres of land near Cork city's docklands, before unlocking them.
The IAWS interims showed a rise of almost 25 per cent in group operating profits to €57.3 million.
Origin recorded operating profits of €11.9 million, a 9.9 per cent increase, while the larger lifestyle food division achieved operating profits of €45.5 million, a 29 per cent increase on the same period last year.
Earnings per share rose by 12 per cent to 37 cent, while the interim dividend also increased 12 per cent to 7.51 cent per share. Turnover at the group rose 17.3 per cent to €838 million.
Profit contributions from its Tim Hortons joint venture in Canada and its 32 per cent stake in Swiss baker Hiestand rose 19.6 per cent to almost €13 million.
Finance costs increased by 92 per cent in the period as a result of higher interest rates and the debt the company took on to fund the acquisition of US baked goods company Otis Spunkmeyer last October. The €463 million deal was the largest ever acquisition in IAWS's history. Total borrowings were €689 million at the end of the period, compared to €217 million at the end of July 2006. Mr Killian said IAWS was comfortable with the level of debt in the business.
Otis Spunkmeyer added €71 million to sales and €5.3 million to profit. A good performance by artisan bread manufacturer La Brea Bakery also helped contribute to strong growth in IAWS's North America division, where turnover grew 125 per cent in the period. But US profits were hampered by a weak dollar.
IAWS has secured planning permission for a manufacturing site at Grangecastle in Dublin, which will support its European food division from 2008.
Analysts yesterday stuck to their full-year earnings per share forecasts of 92-93 cent per share. There was little trading activity in IAWS, which finished down 4 per cent at €17.62.
