Maggie Beer Holdings chair, Susan Thomas, told shareholders at this week’s AGM the board acknowledged the company must focus on earnings growth, capitalise on its “incredible” brand equity, and provide “proof points, not promises” to win back investor confidence after a year in which the company lost its CEO, CFO, and reported a $28.2 million loss.
“The board and management have confidence that our strategy of simplifying the business, reducing costs and scaling key products and brands will deliver improved financial results over the coming 12 months with the real benefits and substantial growth to be delivered over the next 24 months,” Thomas said.
For FY24, MBH recorded $89.4 million in net sales, up 0.8 per cent on the prior corresponding period (pcp). Its trading EBITDA was $0.3 million, down $2.9 million pcp. Excluding its premium dairy business, Paris Creek Farm (PCF), trading EBITDA was $2.3 million.
Snapshot
- Maggie Beer Products (MBP) was up 6.3%;
- Hampers and Gifts (HGA) rose 0.7%; and
- Paris Creek Farm was down (9.5%).
MBH’s reported net loss after tax of $24.8 million included a $13.8 million non-cash impairment of HGA goodwill, $4.6m impairment of Paris Creek Farm, $2.6m HGA earn-out settlement, and $800,000 for onerous contract provision at PCF.
“I am of the firm view that we can build on our reported revenue of $89.4 million. We need to improve margins, reduce the cost of doing business, and look for new avenues of profitable growth,” Thomas said.
She told shareholders that belief was evidenced by the “significant” investments put by herself and director Tom Kiing into the company since the FY24 results were announced, that have made them both substantial shareholders.
The ides of August
In August, CEO Kimba Grange resigned after less than two years in the role. CFO, Craig Louttit announced his departure and the board appointed Penny Diamantakiou as joint COO and CFO. Her background includes senior finance roles at Optus, Yahoo, Nearmap and Woolworths’ digital business.
Thomas said, “In the last few months Penny has applied an unerring eye across every aspect of the business and our operations. This has been done in a manner in which difficult decisions have and will continue to be made in regards to our operations and how we do business.”
Turnaround strategy
Thomas said the immediate plan was:
- an unrelenting focus on the cost of doing business;
- a simplification of business operations;
- a business operation review which includes:
- strategic options review of Paris Creek;
- a review of business structure; and
- supply chain and inventory management, to optimise the business and reduce the cost of working capital.
The plight of its premium dairy business, Paris Creek Farm, remains in the balance yet again. In August, the board resolved that it was an asset held for sale – again. The idea was first broached in 2022, when a strategic review determined its two dairy businesses – PFC and St David Dairy – were non-core assets.
In 2023, with a new CEO (Grange) at the helm, Paris Creek Farms was welcomed back into the fold (St David Dairy was acquired by Goulburn Valley Creamery.). The goal was to capitalise on increasing consumer demand for premium dairy, with speciality cheeses MBP’s largest category. An excellent goal was it not for 2024 to become the year of cost-of-living belt-tightening for consumers.
Meanwhile, the strength of the company remains in with its namesake. Maggie Beer Products division rose 0.8 per cent to $89.3 million, with its core products – ice cream, cheese, stock, pate – rising 6.3 per cent.
Thomas said, “As guardians of that brand, we are committed to continuing to operate and grow the business for the long-term. The short-term challenges I’ve set out today are not insignificant, but meeting and overcoming them is achievable and I look forward with management to delivering on the step change to return this company to profitable growth.”
