Musgrave Group, the Irish owner of Budgens and Londis, put a 20% drop in group profits down to increased investment in lowering prices and the parlous state of the Irish economy.

Pre-tax profits fell 20% to €75.5m (£67.8m) in the year to 31 December on sales down 1% at €4.8bn (£4.3bn).

Musgrave's UK arm Musgrave Retail Partners GB reported a 7.3% increase in sales during the year, to €3bn (£2.7bn). Budgens sales rose 44.5% to €630m because of new store openings, while Londis recorded sales of €1.6bn.

"We have been investing in lower prices for consumers and have been supporting our retail partners," said group CEO Chris Martin. "Increased margin and cashflow support are helping them to compete and deliver lower prices, which has led to a 20% reduction in our profits."

The UK has been earmarked as a key growth area for Musgrave Group.