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Musgrave profits up 42% to £25.6m

STRONG profit growth has continued at the Corkbased Musgrave Group, with pretax profits for 1996 up over 42 per cent to £25

By BRENDAN MCGRATH
Fri Jun 20 1997 - 01:00

STRONG profit growth has continued at the Corkbased Musgrave Group, with pretax profits for 1996 up over 42 per cent to £25.6 million. And with sales up 16 per cent to £854 million, the group was able to increase substantially its operating margins from 2.4 per cent to 3 per cent.

The strength of the economy in the Republic, the impact of the £20 million acquisition of L&N and cost reductions were the main factors behind the continued strong performance, said the chairman, Mr Hugh Mackeown. SuperValu and the cash and carry business in the Republic increased sales and operating profits while the Northern Ireland cash and carry business in Belfast and Derry also made progress.

In the Republic, 15 of the 18 L&N stores have now been sold to independent retailers and rebranded as SuperValu stores while the L&N head office functions were integrated into Musgrave's head office in Cork.

The one blot on the results was a setback in the Dialsur supermarket operation in Spain, where margins and profits fell, although sales were maintained against a background of lower personal consumption.

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But as well as the major expansion in Northern Ireland that the acquisition of the 21 Wellworth stores brings, Musgrave is also planning to develop a countrywide chilled and fresh food distribution network. This will involve the construction of two purpose built warehouses and a fleet of 60 trucks and 80 temperature controlled trailers.

Musgrave is a major cash generator, indicated by the fact that last year it was able to cut its debt from £42.1 million to £7.9 million. Musgrave has on a number of occasions ruled out taking the company public, and with its large cash flow is able to support its expansion programme, the group is under no financial pressure to look for equity funding.

The strong performance produced rewards for shareholders with the dividend up from 22p to 26p per share resulting in a £3 million payout. The main beneficiary was Mr P.J. Musgrave who received dividends of almost £480,000 in respect of his 14 per cent stake in the company. The chairman, Mr Hugh Mackeown, got £246,000 in dividends while Mr Stuart Musgrave received almost £195,000.