GROWTH STRATEGY HURTS AVOCA PROFITS - Expansion costs at family-owned retailer Avoca last year contributed to pre-tax profits declining at the group by 28% to €1.197m, says today's Irish Examiner. New figures show that Avoca Handweavers Ltd and subsidiaries sustained the drop in pre-tax profits in spite of revenues increasing 2.2% from €48.6m to €49.7m in the 12 months to the end of January 31 last year. The company designs and manufactures its own clothing, food and home furnishings from its Co Wicklow base and it has 10 retail stores and cafes in Ireland. In an interview, managing director Simon Pratt said yesterday: “We were disappointed with the performance to January 2012 but it was a year when we put into place some new structures to allow for future growth. “One of the factors in the reduced profits for 2011 was investing in areas of expansion that are already paying dividends in 2012,” he said. “In the past two years we have opened a standalone central bakery, launched a new food-only model at Monkstown and opened a 20,000 sq ft store in Malahide, creating 170 new jobs in the process,” he said. Mr Pratt said that Avoca had its busiest Christmas retail business since 2007 with like-for-like sales on 2011 up 5%. He said: “There appears finally to be more positive sentiment.” Mr Pratt confirmed that counting new business the year-to-date turnover is up over 15% for the retail and café business.
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PROFITS AT AIRTRICITY SOAR TO €13.3m - Pre-tax profits at Airtricity soared to €13.3m in the year to the end of March, figures show. The renewable electricity and gas company suffered a loss of €13.8m the previous year, with lower energy costs and an increase in customers attributed for the turnaround in fortunes, reports the Irish Independent. News of the profits comes just months after almost half a million Airtricity customers incurred a price hike in their annual household energy bills in October, as the company increased electricity prices by 4.7% and gas by 8.5%. Average electricity bills jumped €49.92 a year, while gas prices jumped €69.16. The company did not comment yesterday on the figures Accounts filed with the Companies Office show that Airtricity has net assets worth €43.1m. The number of workers on its books increased from 216 in 2011 to 334 in the year to the end of last March. Payroll costs totalled €12.45m. Debt due for repayment within a year of the accounts stood at €150m, including a €15,000 share dividend. The company announced its price increase last September insisting it was unavoidable. It blamed factors which it claimed were out of its control including the increase in gas and electricity pass through costs and the value of the euro versus sterling.
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FRANCISCAN WELL FOUNDER RAISES GLASS AS MAJOR BUYS HIS BREWERY - Molson Coors has completed the first acquisition of an Irish craft beer company by a major producer in a deal reflective of the surging popularity of niche breweries, writes the Irish Times. Its purchase of the Franciscan Well brand in Cork, for an undisclosed sum, underpins the company’s desire to expand its Irish and British craft operations. The deal includes all existing brands: the award-winning Shandon Export Stout, Friar Weisse, Blarney Blonde, Rebel Red and Rebel Lager as well as the well-known Brew Pub on the North Mall. Molson Coors UK Ireland also plans to expand the company’s output through the establishment of an additional 150,000-keg brewery elsewhere in Cork city. This will increase capacity, drive export of product to Britain, Canada and the US, and double employment at the brewery to 10 people. The move points to the growing popularity of the craft beer phenomenon, which has spawned a generation of enthusiasts in recent years. Such is the level of interest, current retail sales of craft produce in Ireland stands at €24 million and is expected to grow to €235 million over the next five years, increasing its share of the overall beer market from 0.8% to 10%. Molson Coors aims to capture 30% of that.
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JUNK-BOND PRICES POINT TO RETURN OF BULLS - The junk-bond market is sending a bullish signal for the global economy in 2013, with investors in US high-yield securities earning higher returns so far this year than those who have bought investment-grade debt, writes the Financial Times. High-yield bonds are an acute barometer of risk appetite and rises in their prices have often signalled a turn in sentiment. With yields for US junk bonds below 6%, investors are indicating they believe the global economy is on firmer footing and the risk of a financial crisis is diminishing. However, the appeal of junk bonds also has been boosted - unduly, in the eyes of some - by the overall low level of interest rates. Yield-hungry investors have few alternatives, and inflows into junk-bond funds last week reached their highest levels since mid-September, according to EPFR. “High-yield has a captive audience,” said Adrian Miller, director of fixed-income strategy at GMP Securities. “There’s a universe of investors sitting on piles of excess cash that needs to go somewhere. It is all going to high-yield.” The strong start to the year, however, faces headwinds in Washington, where President Barack Obama on Monday called on Republicans in the US Congress to lift the country’s borrowing limits without preconditions. Mr Obama warned that markets could go “haywire” if there is another confrontation over the US debt limit. “Interest rates could spike for anyone who borrows money, he said. “It would be a self-inflicted wound for our economy.”
