Dalgety hit by fall in pot noodles' popularity: Acquisitions help to keep group's figures on the right side despite blow to operating profits

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The Independent Online
A FALL of 10 per cent in sales of Golden Wonder pot noodles cost Dalgety, the foods group, pounds 2.1m operating profit in the six months to December.

But that was offset by a pounds 2.7m contribution from acquisitions and the group's profit before tax rose pounds 200,000 to pounds 56.4m.

Richard Clothier, chief executive, said pot noodle sales had been particularly strong last year because of the launch of a light version for slimmers and fun pots for children, which boosted sales by 9 per cent.

''That was not entirely sustained and sales drifted back down again,' he said. The group is launching Pots of the World, an international range, which it hopes will boost sales in the second half.

The decline in pot noodles meant that operating profits from the group's food business fell from pounds 30.6m to pounds 27.5m despite a pounds 200,000 contribution from Paragon, the European petfoods business acquired from BP in December. Golden Wonder has increased its share of both the crisp and snack markets to more than 20 per cent over the past year, but prices were under pressure because of a rise in the share taken by own-label packs.

Its petfoods business, Spillers, lost market share as it refused to cut prices. In cat foods, where products include Arthurs and Choosy, its share is now 28 per cent, down from 28.5 per cent last time, while its dog food share dropped to 20.6 per cent. Despite the falls, Spillers' performance was similar to last year's.

Mr Clothier said: 'Price competition between food retailers is having an impact.'

However, the impact was being felt most severely in weak products - such as flour - where there was too much capacity. Stronger products, such as crisps and snacks, were better able to resist.

Profits from the agribusiness division rose from pounds 14.5m to pounds 15m due to the acquisition of Oldacre, the feed company, which made pounds 1.4m. The Pig Improvement Company suffered a drop in profits as European pig prices slumped. That was partially offset by a strong performance in the US, where sales of breeding stock rose 21 per cent.

Mr Clothier said the group continued to look for acquisitions, particularly to expand its European snack and petfoods interests. Last year's deals pushed gearing up to 54 per cent of net assets, but Mr Clothier said he would consider going to shareholders if a deal was sufficiently large and attractive.

A rise in the tax charge from 25 to 30 per cent because of lower European earnings meant that earnings per share dropped from 18.5p to 17.2p, but the dividend is increased from 7.85p to 8p. Dalgety's shares fell 3p to 487p.

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