Big jump in Connolly's profits

By Eric Donald

William Connolly and Sons Ltd., the county Kilkenny based animal feed business, has nearly tripled its pre tax profits. The latest available figures reveal a pretax profit of €2.65 million for the year to the end of May 2003. That's increased by €1.74 million from the previous year's profit level of €0.90 million.

A combination of factors have led to this improved result for the Connolly group which is based in Goresbridge. For starters the group's total sales increased by €5.1 million to €56.8 million. Part of this 10% lift in turnover was due to a doubling of sales at the Rednut pet food joint venture with Dawn. Connolly's share of Rednut's sales were €4 million.

But the group's core sales also increased by €4 million, or over 8%, compared to the previous financial period. It's strong branded Redmills range of products helping to drive growth.

The second reason for the groups's improved result was a substantial increase in the operating margin. It increased from 3% to 5%, helping to increase core operating profit from €1.47 million to €2.69 million. Staff numbers have been reduced by 20%, down to an average of 78 compared to 98 in the previous year.

The third positive factor was a first time profit contribution of €223,642 from the Rednut joint venture. This pet food joint venture was set up in 1999 and only became fully operational in 2001, so its a business still very much in its development phase. Some of the loans from Connollys to the JV are now being repaid. These latest accounts from the company's office show a loan repayment of €0.73 million reducing the non interest bearing loan to €1.26 million still owed by Rednut to the Connolly group.

Another positive factor is the continuing progress made by the group in reducing its net debt, which came down from €4.33 million to €2.35 million at the end of May 2003. Net debt had been €5.71 million in May 2001.

This improvement has lowered total interest payments down to €0.34 million in this latest financial period, compared to €0.44 million in the previous year.

The losses at the group's associated companies are reducing.

These include a 30% stake in two American based companies, Celtic Holdings LLC and EU-Tec Nutrition Inc. The former is involved in property while the later is feed company.

All these factors have combined to help lift the pre tax profits to a record high of €2.65 million and leave the balance sheet even stronger.

Total shareholders funds have increased from €12.1 million to €14.4 million at the end of May last year.

The most recent acquisition by the Connolly group was a majority stake in Rothwells, the Tullow and Bunclody based grain and animal feed business.