Jacob-Fruitfield, owner of the Fig Roll biscuit brand and Chef sauces, has cast aside disappointment over its failure to win the auction for the Tayto crisp brand with a declaration that it is still in pursuit of big acquisition opportunities in the Irish market.
The privately-held company revealed a fall in operating profits to €4.88 million in the first full year of trading since Fruitfield Foods acquired the Jacob brands from French group Danone for some €70 million. However, chief executive and majority shareholder Michael Carey said the group's development was on track and that he would be disappointed if Jacob-Fruitfield did not execute a significant transaction within the next 12-18 months.
"We see ourselves as one of the consolidators in the Irish food business. We'd be very keen to acquire companies. There are always a couple of them on the go," he said.
Jacob-Fruitfield has a portfolio of Irish brands - including Silvermints, Club Milk chocolates, Liga and Bewley's tea and coffee - to compete with international food labels. But it lost out in the race last summer for C&C's Tayto brand, which went to Largo Foods at a price of €62.3 million.
"We could have funded that and we had funding in place but we felt the price had gone too high and it was clearly worth more to the ultimate purchaser than for us. It was more expensive than we would have paid," Mr Carey said.
Accounts soon to be filed for Jacob Fruitfield show that the company had a turnover of €88.89 million in 2005 but that exceptional restructuring costs of €1.97 million and interest costs of €4.36 million ate into profits. Pretax profit was €898,000 and net profit was €441,000.
The profit figures were much lower than in the previous accounts, which dealt only with business in the five months after the Jacob transaction in August 2004.
On sales of €42.39 million in that period, the company made operating profits of €6.66 million, pretax profits of €4.96 million and net profits of €4.76 million.
However, Mr Carey said comparisons between the two figures were not meaningful as the 2004 figures were skewed in favour of the seasonally important pre-Christmas period but did not reflect costs in the early part of the year that were incorporated in the 2005 period.
Within 18 months, the company hopes to cash in on some of its property assets by selling the 11-acre site of its factories at the Blessington Road in Tallaght, one of two sites it has in that area. Mr Carey declined to say what the site might be worth but said a sale would present an opportunity to restructure the company's balance sheet, which currently carries bank debt of €71 million. Mr Carey hopes to increase automation, but he does not anticipate difficulty in its industrial relations. "It will affect some people. It will be done on a voluntary basis. It is not an industrial relations problem area," he said.
Although staff accepted a rationalisation plan after a second vote earlier this year, their initial rejection of the plan led to a threat from management to close the company. While the merged Jacob-Fruitfield business has now stripped out duplicated costs, Mr Carey said the company was competing in a very aggressive market.
"Having a bright future depends on having strong brands," he said.
"We had to deal with intense price competition across all the market sectors in which we operate and the relatively high and increasing cost of production in Ireland.
"In particular, the abolition of the Groceries Order has led to some instability in the market, while at the same time we are trying to manage significant increases in energy, labour and ingredients costs.
"We have fewer opportunities to recover increased costs through price increases and have to compete with imports from some of the largest food groups in the world. However, we are continually focused on measures to make the business more cost competitive."
