Australia’s iconic pie maker lowers its expectations
Well-known Australian frozen food manufacturer Patties Foods Ltd has announced a lower than expected net profit after tax (NPAT) of $16.6 million, for the year ending 30 June 2013.
The Company, which owns a number of iconic Australian pie brands such as Four’N Twenty, Nanna’s and Herbert Adams, said the lower trading results are due to “softer market conditions than expected, overall gross margin pressure and the negative impact from commissioning the automated pie packaging equipment”.
Patties Foods Ltd re-stated a non-recurring bad debt level of $411,000 after tax. According to the Company, the debt was a result of the administration of Australian Convenience Foods Pty Ltd. When this debt is excluded, Patties Foods Ltd said it expected NPAT to be $17 million.
Innovation and more automation on way
The Company said an increase in its research and development resources will assist in growing the “pipeline of innovative new products and branded savoury initiatives” in order to support and grow its iconic brands. It also plans to focus on disciplined control of costs, to develop new domestic sales channels and improve manufacturing efficiencies, including the benefit of the complete automation project.
Ongoing problems in frozen fruit brands
In addition, Patties Foods Ltd said it is embarking on a strategic review of the underperforming frozen fruit sector of its business. Business commentators have suggested that Patties may consider selling the frozen fruit part of its business if an interested buyer could be found.
Australian Food News reported in February 2013 that Patties Foods Ltd said it had seen an increase in pressure on its frozen fruit products and on Nanna’s Fruit Pies. The Company said competition from supermarket private labels had eaten into its share of the frozen goods sector.
Patties Foods Ltd acquired frozen fruit brands Chefs Pride and Creative Gourmet in 2007. Australian Food News reported in 2009 that the Company had also spent $1.3 million relocating operations for those businesses from Silverwater in New South Wales to its main production facility in Bairnsdale, Victoria. At the time, Patties Foods Ltd said it expected ongoing savings to counter the cost of the relocation within two years.
Patties Foods Ltd said it expects to announce its full year results for the 2013 financial year on 19 August 2013.