Musgrave, the retail group that owns Supervalu and Centra, has reported a 22 per cent rise in pre-tax profits to €57.6 million for 2002. The figure includes the contribution of Budgens, the British supermarket chain acquired last July.

Turnover was also up 22 per cent to €2.8 billion. Profits after tax rose 20.3 per cent to €39.9 million and net worth rose to €216.6 million from €193.8 million.

Executives said the improved performance had come in what was a "watershed year" for the group. The Budgens takeover offered immense potential for expansion but, with a major debt to finance, the company had to proceed cautiously, with precedence given to long-term growth over short-term profits, it said. Further acquisitions have been ruled out with consolidation of Budgens now a priority.

Supervalu, with 175 outlets in the Republic, reported a rise in sales of 9 per cent to €1.55 billion. Centra, which has 326 mostly convenience stores, increased turnover 18 per cent to €750 million.

Budgens contributed €318 million to group turnover and €13 million to group operating profit for the five months of full ownership during 2002.

Excluding the Budgens acquisition, group turnover grew 8.3 per cent to €2.45 billion.

Mr Séamus Scally, group managing director, said: "[Last year\] was a watershed year for the company with the completion of the acquisition of Budgens. The acquisition gives us added diversity and more expansion potential over the coming years and was financed by debt which is manageable in a cash-generating business such as ours.

"The trading environment continues to be very challenging from an economic perspective and we have seen a decline in growth rates across the sector in the first half of 2003," he said.

Group chairman Mr Hugh Mackeown added: "The group sought to expand its operations outside Ireland and the purchase of Budgens has contributed significantly to the development of the group."