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Farsons registers improvement with caution on outlook 9/28/2022

Farsons registers improvement with caution on outlook

The Board of Directors of the Farsons Group has announced its interim unaudited results for the six months ended 31st July 2022. The Group’s performance during the first half of the current financial year reflects the continued economic recovery from the COVID-19 outbreak, as well as the first full 6-month period of trading free of any significant COVID related restrictions. On premise trade recovered strongly as consumers responded enthusiastically to the reopening of bars, clubs, and catering establishments. Mass social events and Festa related celebrations also returned after a two-year absence, and hotel business saw a marked improvement as tourist arrivals rebounded strongly. However, towards the end of the 6-month period, there were signs of consumer restraint returning as mounting inflationary pressures impacted disposable incomes. 

The Group registered a turnover of €57.3 million during the first six months of the current financial year, a 37.7% improvement over the same period of last year, during which turnover totalled €41.6 million as well as a growth of 7.6% over the six-monthly (pre-pandemic) period to July 2019. Increased turnover has been registered across all business segments. Profit before taxation for the period amounted to €7.8 million compared with €5.2 million for the equivalent period last year – an increase over the July 2019 result of 12.4%. The improved profitability results from overall comparative cost containment along with some improvement in operating margins, even if these remain under growing pressure. Earnings per share attributable to shareholders improved by 43.5% from €0.136c in the first half of financial year 2022 to €0.195c in the comparative period of financial year 2023, based on the 36 million shares in issue.

The return to a somewhat ‘normal’ trading environment has had to be carefully managed within the Farsons Group so as to ensure availability of the Group’s product range and service levels to all its clients, particularly given the increasing challenges across labour availability and the supply chain. The Group has also continued its investment programme. Apart from the completion of works on The Brewhouse project which is now welcoming its first clients and tenants over a phased opening programme; ongoing investments in line with the Group’s programme to continuously seek to secure further operational efficiencies as well as increase innovation and digitalisation, are being undertaken. The Group also continues to embrace environmentally friendly initiatives and investments in line with the strategic objective of becoming more environmentally focused.

Farsons Group Chief Executive Officer Norman Aquilina said: “In order to maintain the current growth trends, it is essential that the Group remains vigilant in what are rapidly changing market conditions. We are having to respond to unprecedented levels of emerging inflation and shortages of supply of certain key raw materials and finished products. The prospect of a recession across Europe, largely as a result of the energy crisis brought on by the Russia-Ukraine conflict, will gradually also weigh on consumer demand patterns.”

“Whilst COVID has by no means been eradicated, its effects seem more manageable and contained. Yet substantial challenges remain across a number of fronts, the timing and overlap of which, are indeed unfortunate both internationally as well as on the domestic front. After a strong start to the current financial year, these challenges are likely to grow in significance over the balance of this financial year, and indeed, beyond. There is a growing expectation that FY 2023 will be a year of two halves, as the second six months of the year witness growing input costs coinciding with a softening of consumer demand as inflation pressures squeeze household budgets which will place significant additional pressure on our margins,” explained Mr Aquilina.

Commenting on the Group’s performance, Farsons Group Chairman Louis A. Farrugia added: “In this scenario, our resilience will again be called upon in the challenging months ahead, but the Board remains cautiously optimistic that our anticipated profitability for the full year to 31st January 2023 as set out in the Financial Analysis Summary that was published on 22nd July 2022, can be achieved.”

“The Board of Directors have already responded to the improvement in results registered for the previous financial year by re-instating its dividend distribution policy to shareholders after a suspension of dividend payment for a period that lasted 24 months. Indeed, the total dividend payment for the financial year ended January 2022 amount to €7 million. Furthermore, the 1 for 5 share issue of €1.8 million which was approved by Shareholders at the AGM held on the 23 June 2022, has meant that SFC plc’s shares in issue increased from 30 million to 36 million. Although challenges remain, as a result of the marked improvement in the results for the first six months of this financial year, the Board has resolved to distribute an interim dividend to shareholders, out of tax-exempt profits of €1.62 million equivalent to €0.045 per ordinary share. This dividend will be paid on Wednesday 19th October 2022 to the Ordinary Shareholders who will be on the Register as at the close of business on Wednesday, 5th October 2022,” he added.