Pretax profits rose at IAWS group by 23 per cent in the half year to January 31st despite tough trading conditions for its agrinutrition business.

Pretax profits, before exceptional items and goodwill amortisation, were up to €42.8 million from €34.8 million during the same period in 2004. Operating profits, before goodwill amortisation, were up 20.4 per cent to €48.6 million.

Turnover, including shares in joint ventures, was up about 9 per cent from €599 million to €653 million.

Commenting, IAWS group chief executive Owen Killian said the company was benefiting from its geographic diversification strategy.

However, he admitted there was "some margin erosion" in its food business, and difficult trading conditions in its agrinutrition business.

He said the group continued to generate substantial free cash and was well-placed to continue its expansion.

The company said its food business managed to increase sales by 14 per cent in the period, but the agrinutrition business suffered a 5 per cent decrease in sales.

"The drivers of the strong food sales performance were Lifestyle Foods in Ireland and the UK, La Brea in the USA and the joint venture with Tim Hortons in Canada.

"The principal factors impacting agrinutrition turnover were lower commodity prices and lower feed ingredient volumes," said a statement.

Group operating margin in the period was 5.5 per cent, compared to 5.6 per cent in the previous period. There were reductions in margins for both the food and agrinutrition sides of IAWS.

Net borrowings were €275 million, compared with €219 million at the same date last year.

The company's brokers, Davy, said the highlights of the results were strong sales growth in the North America and the UK and a positive contribution from French acquisition Groupe Hubert.

"Negative features were the (anticipated) downturn in sales and operating profit in agrinutrition," said its note.