National Foods MD dissatisfied with 2009 numbers

Posted by Nicole Eckersley on 16th February 2010

The head of National Foods has admitted the Australian dairy group is still “some distance” off generating “acceptable” returns as the company integrates local firm Dairy Farmers.

National Foods managing director Andrew Reeves said the coming together of the two companies during 2009 had created a “leading branded dairy and juice business” – and he insisted the combined group was “well-positioned” to invest in its business.

While Reeves said National Foods’ 2009 results were a “significant improvement” on 2008 he also insisted that more needed to be done to improve returns.

“While the results are a significant improvement against the prior year, much of this growth reflects the first-time inclusion of Dairy Farmers. The business is still some distance from delivering an acceptable return on invested capital,” Reeves said.

Reeves was speaking after National Foods’ 2009 numbers were published by parent company Lion Nathan National Foods, the Australian food and beverage group.

National Foods sales stood at A$3.56bn (US$3.16bn), with underlying EBIT reaching A$164.6m. One-time costs linked to integrating Dairy Farmers into the business helped lead reported EBIT to reach A$74.6m.

Lion Nathan National Foods, which takes in the two dairy groups and Australasian brewer Lion Nathan was created last year by Kirin Holdings, the Japanese food and drink conglomerate.

Kirin added Lion Nathan to a business that already included National Foods and Dairy Farmers last October.

Kirin bought Dairy Farmers in November 2008 for A$910m. A year earlier, Kirin bought National Foods for A$2.8bn.

Last week, Kirin issued its global 2009 financial results and said National Foods had put in a “strong performance” despite consumers moving to cheaper milk products.

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