IRISH CRISP maker Largo Foods increased its profitability last year despite a €4 million decline in turnover.
Latest accounts for Largo Food Exports Ltd show that the company increased its pretax profit to €2.56 million in 2010 from €1.96 million in the previous year.
Turnover declined to €84.1 million from €88.2 million in the period.
The company had an operating profit of €10.1 million in 2010 compared with €9.9 million in the previous year.
Its bottom line performance was boosted by a combined €4 million reduction in the cost of sales and net operating expenses, and a €1 million decline in its exceptional costs.
Largo chief executive and majority shareholder Ray Coyle said the reduction in turnover was the result of its decision to cease producing own-label crisps for the UK market.
“There was no money in it,” he said. “So we lost about €8 million or €9 million in sales, but we increased our branded sales in Ireland by 7 to 8 per cent.”
Mr Coyle said Largo’s turnover this year would increase to about €95 million. “Our exports are up by 35 to 40 per cent, primarily driven by Velvet Crunch in the UK. Sales in Ireland are up about 4 to 5 per cent.”
Largo closed 2010 with accumulated losses of €12.4 million, down from €13.8 million in the previous year.
Earlier this year, the company restructured its borrowings. Loans of about €66 million with Bank of Scotland Ireland and Rabobank were replaced by a shareholder loan with German company Intersnack, which increased its stake in the business to 40 per cent as part of the transaction. This new loan is at a significantly lower interest rate for the Ashbourne-based firm and will yield a “saving of €3 million a year” in interest costs, said Mr Coyle.
“We now have the chance to grow the business by 10 to 12 per cent in Ireland,” he added.
Largo’s interest costs amounted to €6.6 million in 2010, down about €300,000 from the previous year.
The company sells about 4.2 million packets of Tayto in Ireland every week. Other brands include King and Hunky Dory.
In the past couple of years, Largo has achieved a €10 million-plus reduction in its cost of sales following a restructuring of the business that reduced its employees from about 700 to some 500.
It has invested about €7 million in automation at plants in Ashbourne and Donegal.
Tayto this week won the branding category in the Bord Bia food awards. In October, Mr Coyle won the industry category in the Ernst Young Entrepreneur of the Year Awards.
