BETTER prices for dairy products and lower costs helped Waterford Foods report a profit before taxation of £24.9 million. This represents a 22.7 per cent increase on 1994's profits of £20.3 million before tax and a restructuring charge of £14 million.
Overall margins at the group improved from 4.6 per cent to 5 per cent, according to Mr Matt Walsh, managing director. The improvement resulted from "enhanced competitiveness arising from the restructuring programme announced in 1994, combined with improved dairy markets," he explained.
The company is starting to enjoy the benefits of restructuring, its liquid milk and fruit juice business in Britain and the rationalisation of its Dublin liquid milk business. Waterford made a £14 million provision in 1994 for the restructuring which will be completed this year, according to Mr Walsh.
"We have some further reorganisation of our distribution in the UK," he explained. In addition, the company will complete the closure of its Premier liquid milk business in Finglas and the transfer of its operations to the Premier Dairy facility in Rathfarnham.
Turnover across the group grew, by 10.7 per cent to £786 million. The consumer products division, which includes liquid milk, fresh dairy products and fruit juice in Ireland and Britain, reported a 17 per cent increase in turnover to £349 million.
This included the contribution in the last quarter of the retail cheese and food service business of the Cheese Company which was acquired in September for £125 million. Waterford is now the second largest cheese manufacturer in Britain with approximately 20 per cent of the cheddar cheese market.
The liquid milk and fresh dairy products business in Ireland had a very satisfactory year, according to the company. However strong price competition in Manchester and Durham in Britain where Waterford has liquid milk operations resulted in lower margins there.
The inclusion of the Cheese Company's food ingredients business in the dairy products division helped this division report an increase in turnover of 7 per cent to £361 million. The division includes all the cheese but after and food ingredients products that are sold to other manufacturers on a commodity basis.
High milk prices in the North following the deregulation of the milk market reduced margins at the Northern operation and the US business under performed last year, according to Mr Walsh.
However, a significant improvement is expected this year as the group's US swiss cheese and food product businesses continue "to develop in terms of volumes and profitability", he said. Longer than expected delays in commissioning a sweetened condensed milk facility at Fond du Lac in Wisconsin also affected the US division
The trading division reported turnover of £77.3 million, with sales of feed and fertiliser said to be particularly buoyant.
Operating cash flow grew by 16.8 per cent to £45.3 million. However, net bank borrowings rose from £104 million to £197 million, reflecting the cost of financing the Cheese Company acquisition. Gearing stood at 96 per cent, compared to 63 per scent at the end of 1994.
Earnings per share increased to 9.48p compared to 1.81p. The group has declared a final dividend of 1.8p per share, bringing, the full dividend for the year to 3.1p, compared to 2.97p, in 1994.
