Foods group IAWS has confirmed it is in negotiations with Greencore on combining the two companies' flour businesses in Ireland. The company has also confirmed that it has bought the Roma Foods distribution business. The Roma deal was first reported in The Irish Times last week.

The two announcements were made as IAWS produced a bumper set of results for the year to the end of July with pre-tax profits up 20 per cent to €59.8 million and turnover up 12 per cent to €1.1 billion. A major contributor to the increased turnover was a full-year contribution from the Pierre's hot food business acquired early last year from Northern Foods.

There has been speculation for some months that Greencore and IAWS were planning to merge their Irish flour operations. Greencore's Odlums subsidiary has three flour mills and IAWS's Bolands operation has one. Any link-up is likely to see the closure of the Bolands mill in Dublin's Grand Canal Docks area.

IAWS chief executive Mr Philip Lynch said the company's own long-standing plans for a state-of-the-art flour mill in Dublin's dockland had effectively been scrapped and that negotiations were under way on combining Odlums and Bolands.

"It is an opportune time to look at capacity in the flour market and do something clever with Odlums. The industry has had difficulties for the best part of 20 years. We were going to build our own modern mill but we both realised that Odlums had the capacity to handle most of the market."

He indicated that the link-up with Odlums would be some sort of a joint venture, in which IAWS would have an interest. "We want to retain an investment in flour," he added.

Mr Lynch also confirmed that IAWS was in negotiations with its 42 per cent shareholder, the IAWS Co-op, on a sale of its extensive riverside properties in Dublin, Cork, Waterford and Foynes to the co-op.

Both the plc and the co-op have appointed independent advisers to oversee the sale.

Mr Lynch would not speculate on the price the sites would fetch but industry sources said that, given their prime riverside locations, the plc is likely to realise in excess of €40 million from any sale.

The results for the year show the increasing dominance of IAWS's consumer foods business, with sales up to €531 million from €429 million. Sales growth in the nutrition/agri side of the business was much more modest - up €18 million to €570 million.

Mr Lynch said the construction of the first of three Cuisine de France bakeries in Canada in a joint venture with the Tim Hortons restaurant chain was on schedule and production was due to begin in 2003. If all three bakeries go ahead, it will involve a €100 million capital investment by IAWS.

Mr Lynch added that its recently-acquired La Brea bread business in the US was close to completing a $50 million bakery near Philadelphia to serve demand in the eastern United States.