Avonmore Waterford's post-merger rationalisation programme, which is aimed at eliminating 1,300 jobs in Ireland and the UK is on target. More than 400 people are expected to have taken voluntary redundancy by the end of April.

The rationalisation and restructuring resulted in an exceptional charge of £160.8 million in the group's maiden results as a merged company and was responsible for converting pre-tax profits of £60 million into a net loss of £108.9 million.

The results, however, were in line with forecasts and, with the restructuring charge taken up front and interest charges falling, analysts are expecting solid growth in the years ahead with pre-tax profits of £8590 million in the current year and £105-110 million in 1999.

Turnover was almost unchanged on £2.37 billion, but improved markets - particularly in its meats division - allowed Avonmore Waterford to boost operating profits by more than 9 per cent to £92.9 million and increase margins to 3.9 per cent.

On the restructuring, chief executive Mr Pat O'Neill said that the group had implemented 250 voluntary redundancies in Ireland since the beginning of the year and had also closed two plants in the UK. More than 100 more redundancies are likely before the end of April, after the new tax year begins.

The most contentious part of the rationalisation is the closure of the Rathfarnham milk plant in Dublin, where the trade unions have pledged to resist any compulsory redundancy. Deputy managing director, Mr Matt Walsh said discussions are continuing with staff and added he was confident that Avonmore Waterford would meet its September target for the rationalisation programme.

Sales of consumer foods - which takes in the dairy and food-service business in Ireland and the UK - were marginally ahead of £1.07 billion with operating profits up £1 million to £39.7 million. This division benefited from lower milk costs in the UK but the cheddar and mozzarrella operations in the UK had a more difficult year. Sales of food ingredients fell from £663 million to £640 million, but a substantial improvement in margins meant that operating profits jumped from £22.9 million to £24.7 million. This performance was described as "satisfactory" while the Idaho cheese operation had a good year with 90,000 tons of cheese produced - more than is manufactured by the entire Irish industry. More than $20 million (£14.7 million) was invested in Idaho last year, and the US market will be a major focus for the group, particularly in the western states. "We now have the critical mass we need in Idaho," said Mr O'Neill.

The star performer last year was the meat division where sales rose from £441 million to £477 million while, operating profits were up over 50 per cent from £9.9 million to £15.3 million. There was record throughput of pigs in the group's factories while the beef business - which had been severely affected by BSE - recovered in the UK.

An indication of the impact of BSE was the loss of all but three of Avonmore Waterford's 30 supermarket outlets in Europe. "We're winning these back by degrees," said Mr O'Neill.