" ... WE EXPECT MARKET IMPROVEMENT PROGRESSIVELY THROUGH 1993"
MINNEAPOLIS, Feb. 23 /PRNewswire/ -- Sir Allen Sheppard, chairman and group chief executive, Grand Metropolitan PLC, addressing shareholders at the Group's Annual General Meeting in London today said: "Since December, when we presented our preliminary results, the economic situation in Europe and the USA has developed much as we expected. In the UK and in other European markets trading conditions continue to be challenging. In the USA, however, we have seen definite signs of improvement. GrandMet's strategy remains unchanged. It is to build highly branded businesses in our chosen sectors and develop them, where possible, on an international scale. We do this by investing in marketing support, operational improvements and strategic acquisitions. Marketing is a key element in this strategy. In our last financial year we spent more than L800 million marketing J&B, Pillsbury, Smirnoff, Burger King, Haagen-Dazs, and our other powerful brands. This was an increase of 10 percent over the previous year. To improve the competitive strength of our brands we work constantly to reduce overheads and to increase quality. Last year we invested L350 million in capital expenditure to achieve both these objectives. During the year IDV, GrandMet's Drinks sector, further increased control of the distribution of its brands. It now controls no less than 94 percent of its global distribution. We achieved this by several strategic moves to strengthen our Drinks business in key markets. We acquired the Cinzano company, which improved our distribution network in Europe and South America. We are making a major investment in Buton, which produces the leading brandy in Italy. And we have invested in Gonzalez Byass of Spain, the owner of the world-famous Tio Pepe brand of sherry. In the Food Sector, we strengthened our businesses by acquisitions in Europe and the USA. At the same time we disposed of our remaining dairy businesses, because, as we reported earlier, they did not fit in with our strategy of focusing on brands. Finally, we continued to strengthen our balance sheet and improve interest cover and, as you know, the board has recommended an 8.4 percent increase in the 1992 dividend. Let me now turn to current trading. In Food, we continue to believe that the worst is behind us in North America. We are beginning to see signs of improvement in sales but we do not expect to see better prices in the vegetable market until the second half. In contrast, our European food businesses are operating in several markets which appear to be softening and, in the UK, sales have yet to show volume increases. In wines and spirits, we can see the same contrast between Europe and the USA. In the USA, consumer spending is rising and a number of our new products are doing particularly well. In Europe, on the other hand, some markets are showing the same softness I noted earlier. IDV's great strength, of course, is its global reach and brand portfolio which make it less sensitive to weaknesses in individual markets. In Retailing, Burger King continues on track with successful introductions of new restaurant concepts and expanded menu items. With Pearle, our US eyecare operation, the major priority is a return to profitability and we are making headway with this. Our Chef & Brewer pubs have implemented successful cost-reduction programs, but they continue to be affected by the recession, especially in the South East. Inntrepreneur Estates is still experiencing a difficult property market but it is now benefiting from reduced UK interest rates. One factor which will be reflected in our 1993 results is the translation effect of the fluctuation in currency values. In the profit and loss account, the effect on our large overseas profits of the recent strengthening of the dollar and, to a lesser extent, some European currencies -- will have a significant favorable impact. The opposite effect will be to increase borrowings in our balance sheet although there is, of course, no cash impact. In conclusion, let me repeat the words I used in the Annual Report, because they are still valid. 'Overall, we expect market improvement progressively through 1993. GrandMet will tackle the challenges of the coming year by following our proven strategy of continued investment in brand marketing, new product development and aggressive cost reduction programs throughout every area of operation.'" -0- 2/23/93 /CONTACT: Terry Thompson of Pillsbury, 612-330-8771/
CO: Grand Metropolitan ST: Minnesota IN: FOD SU:
AL -- MN007 -- 9346 02/23/93 10:42 EST
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|Date:||Feb 23, 1993|
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