MUSGRAVE GROUP RESULTS YEAR ENDED 31 DECEMBER 2008

14 May 2009


Musgrave Group, partner to entrepreneurial food retailers and foodservice professionals in Ireland, the United Kingdom and Spain has announced its Group results for the year ended 31 December 2008. 

Key Financial Highlights:
•    Musgrave sales of €4.8 billion up 5% at constant exchange rate (down 1% at actual rates);
•    Retail sales by our retail partners of €7.1 billion up 6% on a constant exchange rate basis (down 0.6% at actual rates);
•    Profit before tax of €75.5 million, down 20%;
•    Profit after tax of €65.1 million, down 8% (1.3% return on sales);
•    Net debt reduced from €95.6 million to €86.2 million.

Commenting on the performance for the year, Chris Martin, Group Chief Executive, Musgrave, said, “Given the recession across all the markets in which we operate and the fact that the Irish grocery market is contracting, this is a satisfactory performance.  I am pleased to report that our Irish retail brands outperformed the market again in 2008 driven by our investment in brand development over the past three years.  Behind these sales we have been investing in lower prices for consumers and have been supporting our retail partners during these difficult times. Increased margin and cashflow support is helping them to compete and deliver lower prices which has led to a 20% reduction in our profit. This ongoing support is our commitment to ensuring that we and our retailers are able to compete in an extremely challenging market.” 

“In addition to lowering prices, our strategic focus has been on developing our brands to ensure that there is no compromise on the quality of the shopping experience. Consumers have responded well to this combination of exceptional quality and lower prices. We have invested more than €140 million in price reductions on thousands of products across our Irish retail brands and we will continue to invest in price reductions this year.  These lower prices together with the unique insight our retail partners bring to serving their local communities ensure that today’s shopper gets real value, real choice, a compelling range of well-known Irish and international brands, superb quality and excellent customer service.  We have a well-established and long-term commitment to supporting Irish food producers. This approach is at the heart of the entire organisation and will continue to provide us with an enduring source of competitive advantage.”    

“The uniqueness of our business is making real progress in the UK.  Our UK retail brands SuperValu, Centra and Mace in Northern Ireland and Budgens and Londis in GB performed well in 2008 with more than 2,400 stores owned and operated by independent retailers.  Clearly our business model is taking hold in the UK and is responding well to the changing needs of the consumer who is hunting for choice and value in a local context. With the recent acquisition of an additional 13 Somerfield convenience stores that are in the process of being sold to independent retailers and the successful integration of Mace into our Northern Ireland business, we are continuing to invest and grow in that market.”

Business Review

Musgrave Group supports nine retail brands across the Republic of Ireland, the UK and Spain. The Group’s retail partners operating under these brands reported good growth in 2008 with a combined turnover of €7.1 billion, up 6% on a constant exchange rate basis.

Republic of Ireland
In the Republic of Ireland, SuperValu and Centra delivered increased sales, primarily from new stores.   Over the course of 2008, eight SuperValu and 44 Centra stores were opened in the Republic of Ireland alone, bringing further competition to the market. Daybreak also delivered increased sales primarily from the opening of 30 new stores.
Musgrave’s retail brands in the Republic of Ireland grew sales to €4.0 billion up 5.6%;
Centra retailers achieved sales of €1.5 billion, up 9.3%;
SuperValu had another year of growth with retail sales of €2.3 billion, up 3.4%;
Sales in our Cash and Carry business in the Republic of Ireland and Northern Ireland were flat.

United Kingdom
In the United Kingdom, Budgens and Londis, together with SuperValu, Centra and Mace in Northern Ireland delivered a robust performance with retail sales of, €3.0 billion (Stg £2.4 billion) up 7.3%. Since the year end, the acquisition of 13 convenience stores was also completed and these stores are in the process of being sold to independent retailers.


GB
In 2008, retail sales in independent Budgens stores grew by 44.5% to €630 million (Stg £503 million) benefiting from the increase in the number of independent stores;
Londis retailers achieved combined sales of €1.6 billion (Stg £1.3 billion).

Northern Ireland
In 2008, the combined sales of SuperValu retailers grew by 8.1% to €240 million (Stg £192 million);
Centra retailers had combined sales of €223 million (Stg £178 million) up 11.6%;
193 Mace retailers had combined sales of €204 million (£163 million).

Spain
SuperValu and Dialprix retailers achieved sales of €126 million, up 4.6%.


Outlook

Commenting on the outlook for the Group in 2009, Chris Martin, said, “Our work over the past three years on developing our brands has ensured that our retail partners in all markets are competing aggressively. The Irish grocery market is extremely challenging, but we will continue to bring lower prices to the consumer.  We are confident that our retailers through their partnership with Musgrave will continue to deliver a competitive offer. As an Irish business working with local entrepreneurial food retailers and suppliers, we will drive our business forward. In the UK our business model is attracting independent retailers and based on a solid foundation built up over several years, we see further growth in this market.”

“We are an Irish business committed to the long term with shareholders who recognise the need to support our retail partners for the future.  The business has succeeded in reducing debt again in 2008 ensuring the business is solidly placed to adapt to the challenging times ahead.  I am confident that through developing different and better brands, driving efficiencies in our business and delivering value to a price-focused consumer as well as supporting our retail partners, Musgrave and our retail partners will continue to successfully adapt to the difficult market conditions and emerge as a stronger business.”

Ends



For further information please contact:

Joe Carmody / Mark Cahalane                Edel Clancy
Edelman                                              Musgrave              
+353 1 6789333                                  Director of Communications
+353 86 8058764                                +353 21 452 2123
+353 87 2302737                                 +353 86 852 3998


Notes to editor:

About Musgrave

The Musgrave Group is partner to entrepreneurial food retailers and foodservice professionals in Ireland, the UK and Spain. The company was founded in Cork in 1876 by brothers Thomas and Stuart Musgrave, and is today one of the largest and most successful companies in Ireland. In the UK, Musgrave Group acquired the Budgens chain of convenience stores in 2002 and Londis in 2004. In 2007 it acquired J&J Haslett in Northern Ireland, which includes the Mace brand, XL Stop and Shop and Holmes Cash and Carry.  This brings to more than 3,400 the number of stores the company supports in Ireland, the UK and Spain.

SuperValu and Centra – the leading network of supermarkets and convenience stores in the Republic of Ireland and Northern Ireland. The network comprises a total of 810 outlets which are owned by progressive independent food retailers.

Budgens and Londis – in Britain there are 183 Budgens and 1861 Londis stores which are independently owned.

Daybreak and Mace – network of independently owned convenience stores. The Group currently partners retailers in 138 Daybreak stores in the Republic of Ireland and 193 Mace stores in Northern Ireland.

DayToday and XL Stop and Shop – two delivered retail networks comprising of 161 DayToday stores in the Republic of Ireland and Northern Ireland and 70 XL Stop and Shop stores in Northern Ireland.
 
Musgrave Cash & Carry – provides cash & carry services to retail and foodservice customers from branches in both the Republic of Ireland and Northern Ireland.

Musgrave Foodservices – Offering a full multi-temperature range of products for the professional caterer.

Dialsur, SuperValu, Dialprix and Dicost – the Group’s Spanish operation of supermarkets, convenience stores and cash & carry outlets.

Recent Awards

Deloitte Best Managed Companies Award
Excellence through People – Platinum Award