LYONS Irish Holdings, which entered the Northern Ireland tea market 17 months ago, is continuing to increase its sales in a very competitive market.
Announcing an increase in group pre tax profit from £4.2 million to £4.37 million in the six months ended February 15th, the chairman, Mr Pierce Butler, said it "will be some time before this translates into significant profit".
Lyons' share of the Northern Ireland market has now increased to about 4 per cent and the target is to increase this significantly by 2000. The market, with a retail value of about £22 million, is dominated by Punjana, which has some 34 per cent of the market. Nambarrie has 30 per cent and Tetley around 15 per cent.
No exact figures are available for Lyons' sales in Northern Ireland. But they could be running at an annual £700,000, based on a one third mark up in the retail outlets. Industry sources say Lyons will now be looking to quadruple this by the end of the century when significant profits could be generated.
However, the move into Northern Ireland has been costly. No details of promotional costs have been released but Lyons has been carrying out an extensive advertising campaign. And it is understood a small loss has been incurred on the Northern sales. This is reflected in the drop in group operating margins from 22.3 per cent to 22 per cent.
The latest results are the first released since the minority shareholders turned down a bid from Unilever Ireland, which increased its stake from 75 per cent to 80.6 per cent. The board, with the Unilever members, is understood to be cohesive and working well together.
The aborted bid still leaves Lyons' biggest problem unresolved. Its cash mountain has increased further to £177.4 million from £160.0 million. This represents 93 per cent of net assets, up from 89.5 per cent.
The company is "not actively looking for acquisitions" to absorb some of the cash, Mr Butler said. But if something "appropriate presents itself, we will look at it".
Its diversification programme involving the set up of the Dunkin' Donuts outlets has not yet paid off. It owns six outlets and there are about 60 franchise outlets in petrol stations. No separate figures have been released but this division has just broken even.
Lyons' sales grew from £13.3 million to £14 million. Investment income rose from £1.25 million to £1.28 million. Earnings per share increased from 11.94p to 12.83p. Shareholders are to benefit from the results with a 0.8p rise in the interim dividend to 8.6p. This will be paid on May 30th.
Mr Butler described the results as a "very significant achievement".
