The Farsons Group has announced its half-year results to 31st July. The highlights of the results are as follows:

• Group turnover increased by 4.6 per cent to e35,306,000;

• Gross profit margin decreased from 23.4 per cent to 21.5 per cent

• Operating profit amounted to e2,010,000 (2007: e2,905,000);

• Profit before tax amounted to e1,520,000 (2007: e3,312,000)

In considering the results for the period, attention is drawn to the following factors:

a) Group turnover improved due to increased sales across all business segments. In particular, beer sales registered growth in value and volumes

b) While soft drink sales increased in volumes, sales values per litre decreased substantially.

This was mainly due to changes in consumer preferences to one-way packaging as a result of the full liberalisation of the soft drinks market

c) The franchise food retail and import businesses continue to perform well, achieving growth in a number of product sectors

d) Operating profits were impacted by initial efficiency set-up problems encountered with the newly commissioned production lines. These are being addressed, and production efficiencies are now approaching target levels

e) Gross margins have also been adversely affected by the advent of illicitly imported beverages, which have not been subjected to eco contribution, and, in some cases, VAT, thus placing the group at significant unfair competitive disadvantage. Strong representations have been made to the government in this regard

f) The interim results were also affected by a lower profit on the disposal of property and an increase in finance costs, the latter as a result of the commissioning of the new soft drinks production line and distribution centre at the beginning of the year. In 2007, prior to commissioning, interest costs were capitalised

g) The group is now operating in a wholly liberalised market in which price competition is acute.

The Board of Directors, through its management structures, is in the course of implementing a permanent cost reduction programme, which will result in a head count reduction of 60 people within the next 12 months. These reductions will be achieved through natural and early retirements and voluntary schemes.

Reductions in overhead costs are also being targeted. These cost reductions can be implemented directly as a result of the capital expenditure programme and reorganisation undertaken over the past two years. The board of directors is determined and confident that it will achieve these targeted cost reductions and that, as a result of these measures, the emerging cost structures will allow for improved profitability levels.