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DIFFICULT CHANGEOVER YEAR LEADS TO DECREASE IN FARSONS' PROFITS 28/04/2009

Simonds Farsons Cisk plc has announced a substantial decrease in profitability for the financial year ending 31st January 2009.

Group turnover amounted to €66,441,000, marginally up from the previous year whilst profit before tax amounted to €895,000, down from €4,146,000.

The principal area where profitability was affected is the soft drinks business where substantial costs were incurred in the changeover from the returnable bottle to PET and cans. During the year under review the company inaugurated a new €25,000,000 soft drinks packaging hall and a logistics centre. The company incurred large one-off costs during the initial changeover period such as large write-offs of old stock, poor productivity during the initial learning phase, and impairment write-downs on redundant machinery.

A large proportion of these costs are one-off costs. Group CEO Louis A. Farrugia said: “When effecting changes as fundamental as the ones that Farsons has just undertaken, it is not unusual that the learning curve is steep and costly.”

The company cited other reasons for the results, such as substantial increases in costs of raw materials such as malt and hops, and competition from a flood of parallel traded products, at times illicit, following the liberalisation of the market.

The Group has however succeeded in reducing its cost base employing 50 less full time equivalent employees. This initiative is ongoing and will help the group return to acceptable levels of profitability.

The board of directors is recommending the general meeting to approve a dividend of €1,000,000 and the issue of one bonus share for every six held.

The annual general meeting of the company is set for 25th June 2009.