Farsons Group recorded a pre-tax profit of €16.1 million in the financial year ended 31st January 2024 (FY23-24), representing a 4.9 per cent increase from the €15.3 million reported in FY22-23.

The figures were announced in the group’s Annual Report for the financial year, released on Wednesday (today).

Established in 1928, Farsons Group is engaged in the brewing, production, sale and distribution of branded beers and beverages, the importation, wholesale and retail of food and beverages, the operation of franchised food retailing establishments, as well as property development.

During the financial year, Farsons Group’s revenue surged upwards by 12.4 per cent to €132.9 million (FY22-23: €118.2 million), driven by an improved performance in the beverage and food operating segments of the group.

Income from the beverage sector rose by 8.8 per cent, while that of the food sector grew by 23 per cent. Revenue from the beverage sector included almost €1.7 million from the first full year of operations at The Brewhouse, while that of the food sector came from the full year of operations for franchised outlets which opened midway through the previous year, together with a growth in demand.

As a result of the increased activity, cost of sales was also on the rise, going up by 12.6 per cent to €83.4 million (FY22-23: €74 million).

Additionally, during the financial year, increases were also experienced in selling and distribution costs as well as administrative expenses, which stood at €14 million and €17.5 million, respectively. While much of this increase was related to volume growth, it was also impacted by higher employee costs and the first full year of costs for the start-up of The Brewhouse operations.

In fact, employee costs for the financial year increased by €3.3 million when compared to the previous year, equivalent to a rise of 8.8 per cent.

The group’s overall rate of return on turnover prior to finance costs dropped from 14.1 per cent to 13.1 per cent.

In terms of its balance sheet, Farsons Group’s total assets as at the end of the reporting period amounted to €212.3 million, contracting slightly from the €214 million reported in the previous year.

The Board of Directors resolved to recommend the distribution of a final net dividend of €3,960,000, equivalent to €0.11 per ordinary share of €0.30. The payment of this dividend will be done on 27th June 2024 to shareholders registered on the company’s register of members as at close of trading on 5th June 2024.

Looking ahead to the present financial year (FY24-25), Farsons Group’s Directors stated that the outlook is “diverse.” While they point towards the continued growth in the tourism industry, competition across all market segments “remains intense.” Costs are also expected to continue rising due to ongoing labour shortages.

Farsons Group Chairman Louis A. Farrugia

“This combination of a competitive marketplace and rising costs means that margin compression will be ongoing. As noted last year, it is neither possible nor indeed desirable to pass on all increases in costs, and we must find a solution to these pressures through greater efficiencies and innovation across all our activities,” they continued.

On his part, Chairman Louis A. Farrugia welcomed the increase in trading activity throughout FY23-24, yet also reaffirmed the Directors’ point that not all inflationary cost increases could be passed on.

He also provided updates on the Ħandaq logistics centre, stating that construction on the centre has started with a view to it being completed by the end of 2026. Additionally, Farsons Group also intends to proceed with the investment of an automated returnable logistics facility at Mrieħel, set to be completed by summer 2026.

“Taken together, these two capital projects will involve an investment in excess of €30 million,” Mr Farrugia said.

“Farsons Group is now unrecognisable from that of a decade ago. Not only has the operation changed visibly, but more importantly, the company’s management and employees are professionally more prepared to look at new ideas and ready to venture into new revenue streams,” he added.

Mr Farrugia remarked that managing compliance in the cumbersome regulatory environment Farsons Group is operating in “is becoming more demanding on management and the Board,” yet the group is equipping itself “with the necessary resources” to do so.

Farsons Group CEO Norman Aquilina

He proceeded to thank the Board of Directors and management team for their support during the year, particularly CEO Norman Aquilina and Deputy CEO Michael Farrugia.

In his review, Mr Aquilina noted that during the financial year, Farsons Group made “significant progress” in sharpening its strategic position and in strengthening its culture, thus “delivering positive results.”

“The past few years have been extraordinary and challenging, temporarily calling for short-term focus. Going forward, we are now well set on further building on the positive momentum gained over the years, even if the trajectory is not short of challenges, particularly of a competitive nature,” he continued.