Foods serve up solid results for IAWS

SOLID growth across its lifestyle foods businesses in Europe and the US yielded better-than-expected first-half results from IAWS Plc.

Total sales for the six months to January 31, 2006 rose by over 13% to €715 million, but that falls to 4.4% when foreign currency differences and acquisitions are taken into account.

Total operating profit came to €46m for the six months and the food division accounted for almost €41m of that.

In the other sector, the agri division's profit contribution was flat overall during the period.

Operating profit fell from €6.1m to €5.1m, but the decline was attributable to the disposal of a subsidiary operation in the previous trading period. Almost 80% of profits from the division are generated in the second half.

Shares in the group fell 15 cents to €14.10 by mid-morning following the announcement of the results.

IAWS, with subsidiaries including Shamrock Food, Roma and Cuisine de France, has been one of the best-performing food stocks in the world over the past 10 years and analysts are still bullish on the stock.

Chief executive Owen Killian said the results highlighted "strong underlying growth" across all the group's food markets, particularly in the US.

There the group delivered growth driven by increased investment in production.

"The food division is benefiting from its position in growth categories and continuing investment in research and development," he said.

For the first time, the results also include a full six-months contribution from French-based Groupe Hubert, acquired in December 2004 in what was the biggest acquisition to date by IAWS.

The European-based food operation including Ireland, Britain and France accounted for the bulk of the €41m with €33.9m generated in those markets.

The US chipped in operating profits of €7m during the six months under review. Underlying sales in the US however, were ahead by nearly 18% against 8.3% in Europe.

In the US the group is involved in the commissioning of a €50m plant to boost output of its La Brea Bakery in New Jersey, pushing total investment to €100m in recent years.

Also contributing to the group's evolution is Tim Hortons, the biggest restaurant chain in Canada which is the subject of a flotation. This is a joint venture between the two groups with its Always Fresh bakery range having been fully rolled out within the Tim Hortons chain.

IAWS says further growth will be organic and will include the opening of new restaurants.

Mr Killian said that the floatation will be good for IAWS and will help to motivate Tim Hortons management to deliver higher growth and profits.

Owned by Wendy's, Tim Hortons, is the jewel in the crown of the group.

And while the decision to float the restaurant business will not materially impact on the IAWS joint venture, its coming to market will help raise the group's profile.

Analysts say they will tweak their forecasts upwards for the full year when they have a clearer picture of the first-half outturn.