Patties Foods, the maker of brands like Patties, Four'N Twenty pies, Creative Gourmet and Nanna's has reported a sharp fall in profit following a write-down on its frozen fruit business.
The company’s profit for the year ending 30 June fell to $4.8 million, 75 per cent lower than the $19.5 million it announced in the previous corresponding period. Moreover, it’s the first drop in earnings in four years, according to the company’s managing director Greg Bourke.
“Market conditions remain difficult and for the first time in four years, we have reported a decline in earnings,” he said.
The company had previously predicted Net Profit After Tax (NPAT) of $16.6 million for the year ending 30 June, however, it took a noncash impairment charge of $11.8 million against its frozen fruit intangible assets.
Patties has a 46 per cent market share of the frozen fruit category in supermarkets. In 2007, Patties purchased the Creative Gourmet brand and the Chef’s Pride foodservice brand, and its Nanna’s frozen fruit range was launched in 2010.
A review of the company’s frozen fruit business that was announced in June would continue, Bourke said.
However, the company said its branded savoury products – its core business – continued to grow.
Patties Foods chairman, Mark Smith, said: “The market leading branded savoury business continued growth in FY13 in challenging trading conditions. We remain focused on our strategy of supporting and growing our core brands through innovative new products, marketing campaigns and channel development.”
The company has also had problems with the installation of a new robotic pie packaging system.
“Our manufacturing result was disappointing as we did not meet our own high standards when commissioning the automated pie packing plant, despite other parts of the bakery performing well with good improvements in efficiencies,” said Bourke.
Patties said it would drive earnings growth through disciplined control of costs, by increasing its price and by investing in the development of its core brands and new channels.
Patties Foods has written down its frozen fruit intangible assets by $11.8 million.
