Musgrave GB turns oft-quoted corner; Moody feeling flat about C&C; upwardly mobile aspirations; recession's a gift for Dawson
UK boost for Musgrave
THE IRISH market might be a struggle for wholesale group Musgrave at present, but accounts just filed in the UK show the business there has turned a corner, to quote Brian Lenihan.
Musgrave Retail Partners GB Ltd, which comprises the Budgens and Londis chains in Britain, shows that the group returned to the black in 2009.
Musgrave made a profit of £3.7 million (€4.2 million) last year compared with a loss of £5.6 million (€6.3 million) in 2008. Last year’s loss related to costs of restructuring the business in the UK through the combination of Budgens and Londis under the one umbrella. Musgrave expanded its footprint in the UK in 2009, paying €14.4 million for 13 retail stores from Somerfield.
These were mostly in the south of England and are now operating as part of the Budgens chain. Over time, as with other Budgens shops, Musgrave will sell them on to franchise operators. This is a model Musgrave also operates in Ireland.
“This was a good opportunity to get a large number of stores in an area where we wanted to be,” Tim Kenny, Musgrave’s group finance director, told me this week.
Kenny said sales “are quite strong” in the UK. In Ireland, Kenny said trading is “solid, but we still have food deflation”.
Volumes are up but prices are down. “The consumer is being very careful with their pennies and their pounds,” he added.
Kenny indicated that turnover would be down this year, but declined to comment on profitability.
Musgrave reported a surplus of €70 million in 2009.
“It wouldn’t be appropriate to say [about profits] at this stage . . . the last three months of the year in the run-up to Christmas are always very important for the business.”
He said a “small number of stores” have closed in Ireland this year. “But that’s just the normal cut and thrust of this business.”
On a positive note, in January, Musgrave won approval from the Pensions Board on its application to adjust the benefits paid to members in order to tackle the deficit in its scheme.
Any increase in payments to members will now be discretionary rather than automatic. The good news for staff is that they won’t have to make any additional contributions to the scheme.
“We got acceptance from the Pensions Board earlier this year and we’re pleased about that,” Kenny said.
Fizz long gone in Britvic's frothy purchase of CC
BRITVIC CHIEF executive Paul Moody must rue the day he ever decided to buy C&C's Irish soft drinks business.
By contrast, it was a highlight of Maurice Pratt's time in charge of the Clonmel-based drinks group.
Britvic paid a frothy €249 million at the top of the cycle in the summer of 2007. While that gave it ownership of most of the leading soft drinks brands in Ireland, it coincided with the collapse of the Irish economy.
The fizz has long since gone from the deal and after three years of struggling through the recession, barely making a bob here, Moody has decided to write down the value of the asset when its full-year results are released on December 2nd.
Britvic's Irish revenues fell by 5.2 per cent in the year to the end of October, while the group as a whole recorded growth of 16.4 per cent.
"Clearly when we were doing the deal nobody had the perspective on the global economy that we have experienced," Moody told me yesterday. "The decision was the right one at the time. We still believe that we have got the brands and the infrastructure to support our business."
I wonder whether his shareholders agree.
For now, Moody is keeping mum on how much of a haircut Britvic will take on its Irish acquisition. But it's sure to be substantial.
Britvic has already extracted €27 million in synergies from the Irish business, and closed its Cork plant with the loss of 65 jobs.
Manufacturing is now focused on its facility in Kylemore in southwest Dublin. More pain could be on the way, with the company indicating yesterday that "employee engagement" on its latest restructuring proposal has begun. This is code for more job cuts, although Andrew Richards, who heads Britvic Ireland, declined to say this yesterday: "We don't yet know." He said green shoots of recovery were "very few and far between". With a tough budget ahead, the prospects are not getting brighter for Britvic in Ireland for the foreseeable future.
Brave move by Just Mobile
FORMER IRELAND soccer player Jason McAteer was a no-show for the launch of Just Mobile, but the promise of rasher sandwiches and Irish coffee still attracted a large crowd to O'Donoghues pub in Dublin yesterday morning.
Just Mobile will target the pre-paid market by piggybacking on the Vodafone network. It has signed a deal with BWG to distribute its products through 650 Spar and Mace stores around the country.
It is a brave move given that the Irish market is already crowded and Eircom has just launched e-Mobile, its own mobile virtual operator. And that's to say nothing of the recession. After a three-and-a-half-year break from telecoms, where he's made a few bob over the years, entrepreneur Seán Melly is back in the game as an investor and chairman at Just Mobile, which launched yesterday.
"We're starting from scratch with no baggage and we think there's a great opportunity there. It's a question of finding the right offer."
Just Mobile expects to be "cash positive" within a year and is fully funded.
Melly had a tilt at Eircom last year, getting to the last two in the bidding. But he lost out to Singapore-based STT.
"I'm still none the wiser as to how they're going to deal with the debt . . . it's like a ticking time bomb. And they've also got to do an operating restructuring."
Join the queue, Seán.
Gift voucher boom as sales jump by 27%
THE RECESSION seems to be suiting entrepreneur Michael Dawson and his company, the Gift Voucher Shop (GVS).
At the launch on Wednesday night in the Grafton Lounge of an iPhone application for his One4All gift vouchers – with Seán Gallagher of Dragons' Den fame doing the honours – Dawson revealed that sales this year are up 27 per cent year-on-year in Ireland and up by 250 per cent in Britain.
"We now expect turnover this year to exceed €150 million," Dawson told his champagne-quaffing audience, which included Fianna Fáil TDs Frank Fahey and Timmy Dooley.
GVS, which also operates in Malta, won a contract earlier this year to launch a budget savings card for the UK Post Office, which already has 300,000 members and is being managed out of its base in Swords, Co Dublin.
Other developments are in the pipeline. On November 1st, Dawson will launch online to allow customers to purchase goods through the web.
As if to reflect the mood of the nation, Dawson has developed a pink-coloured app for the UK market and a blue one for Ireland.
LITTLE THINGS
WITH TERMINAL 2 due to open on November 19th, the Dublin Airport Authority must now be wondering if Michael O'Leary will pull a publicity stunt to take away from the occasion, which will be presided over by Taoiseach Brian Cowen.
Might he hire an elephant, for example?
"No," was Michael O'Leary's reply yesterday when I put it to him.
"There'll be enough white elephants inside it," he said. "They're getting a dead duck [Brian Cowen] to open a white elephant that's over budget and over time. I still haven't even got the guided tour."
So the DAA and the Taoiseach can relax. Or can they?
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DENIS O'BRIEN has picked up another accolade for his post-earthquake work in Haiti, receiving the Chello Foundation Humanitarian Achievement Award at a charity ball in Dublin's Mansion House.
Chello is an offshoot of Liberty Global, the US-based company that owns cable TV group UPC. It aims to support 10,000 Aids orphans in Africa.
Irishman Shane O'Neill, who is also a board member with the NTMA, said O'Brien was an "obvious choice" for this award, given his work in Haiti and with Special Olympics.
In spite of the recession, the Irish business community was out in force to support the event. "The response in Ireland has been fantastic," O'Neill told me. "In London, we got 220 people, in Ireland we've got 400 in spite of the recession."
