Responding to the release of Patties Food Limited 2015 (FY15) financial results, which showed a significant slump in earnings mainly due to the impact of the recent frozen berries recall, Patties CEO Steve Chaur said that future is looking much brighter for the food maker thanks mainly to their diverse food portfolio.
“The FY15 reported Net Profit After Tax [NPAT] result was significantly impacted by the frozen berries recall, which led to a $13.6m non-cash impairment (pre tax) of the Frozen Fruit business,” said Chaur.
“Our core savoury products, which represent over 90 per cent of our business earnings, performed solidly, delivering an increase in sales revenue and profit growth in our iconic savoury brands,” he added.
However, financial results are a lot like berries – you can always pick the better looking ones, and as such, the figures look worse when you notice the EBIT- or Earnings before income Tax result – where the drop in earnings went from $26.0 million in FY14 to $9.1m in FY15.
Chaur also noted that mechanisms have now been put into place to prevent a repeat of this problem.
“[It’s] Not appropriate to comment, other than to say we are continuing to test every batch before it is released to the market with nil detection found to date. Patties Foods frozen berries are amongst the most rigorously tested berries in the Australian market. “
Another meaty issue that is rubbing the Patties ledger the wrong way is that of beef prices, which have increased by about 40 per cent since the beginning of the year, a fact that is impacting on Patties profitability.
“Beef prices are at record highs in Australia, impacting all processors in our category. There’s been continuing growth in the global demand for Australian beef, so price inflation is likely to continue for the foreseeable future,” said Chaur.
“Patties Foods responded early in the past year to put steps in place to mitigate the ongoing impact of rising beef prices, such as a strategic procurement program, price increases and operational cost reductions.”
“We’ve also restructured our operations and driven our Bakery Continuous Improvement program, which has positively impacted on earnings over the past and coming year. “
“We are focused on expanding our savoury business, optimising our cost base, driving efficiency gains at our Bairnsdale bakery, and delivering profitable growth.”
Moving forward, concluded Chaur, it’s all about staying firmly in the black.
“New product development, effective marketing and channel focus have an important part to play in achieving growth.”