Musgrave profits fall 7pc but net debt cut to €59m
MUSGRAVE Group, one of thelargest employers in Ireland through brands such as Super Valu and Centra, yesterday reported a 7pc fall in profit before tax to €70m.
The group, which has around 3,400 stores across Ireland, the UK and Spain, saw sales fall by 7pc to €4.5bn while net debt was reduced to €59m from €86.2m.
The results were described as "satisfactory" by the group chief executive Chris Martin but he warned that although the Irish market has stabilised, and the UK market grew, challenges remain for the group.
"In Ireland, the challenges have been significant. In 2009, the grocery market and food service markets declined by 7pc and in excess of 20pc respectively. Overall sales in Ireland were €2.7bn, 7pc down on 2008," he said.
The dividend per share for 2009 was reduced to 32.3c per share from 34c. The total dividend was €19m against €20m in 2008.
The results follow what the managing director of Musgrave Retail Partners Ireland, Donal Horgan, called a "panic" among consumers in mid-2009 as they looked for the best prices available and traditional retailer loyalty evaporated.
However, he believes that loyalty is now returning to the market as prices are reduced. The average family shopping basket for a week now costs around €125 as against €150 18 months ago.
While sales in Northern Ireland and Britain grew by 3pc to £1.4bn (€1.67bn), Mr Martin warned that the UK businesses still faced challenges as the new government is expected to bring in severe spending cuts at next week's emergency budget, calling the UK market "benign but getting tougher".
"It seems inevitable that spending will fall and taxes will go up so there will be pressure on the average consumer spend," he said.
The retail market in the UK grew by 5pc last year. Mace in Northern Ireland was the only Musgrave brand that underperformed the market by a significant margin, seeing a fall of 11pc. This was blamed on the loss of a retail contract with Maxol petrol stations in the North. The Spanish business, based on the south coast around Murcia and Valencia, saw sales fall by 3pc.
The group holds a generally positive outlook for 2010 and beyond. It expects prices to continue to fall, but for them to be more stable this year.
"Although the trading environment continues to be tough, our business model is robust and we are confident in the long-term future of the business," said Mr Martin.
"The plans we have in place will ensure Musgrave and our independent retailers emerge stronger from the recession with strengthened businesses and a platform for future growth."