Australian pie producer Patties Foods posted a 17% increase in net profit after tax for the first half of the year to A$5.6m (US$4.3m), on sales 8.7% higher at $61.1m. However, the revenue growth was below the company’s forecast and it warned that if current trends continued it would not be able to meet its full-year forecast.
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The company, which produces the Four’n Twenty pie brand, had originally forecasted a net profit of $16.8m for the 2006/07 financial year. It said that if the trend continues, the negative effect on EBIT would be in the range of 10% to 15% on the prospectus forecast of $25m.
“While trading results for the first half were higher than the corresponding period last year they were however below expectations, with changing market conditions, especially December, negatively impacting on the projected results,” the company said. “Sales and EBIT were 6% below projections as a consequence.”
The company added that storage costs had been appreciably higher than both the previous corresponding period and its expectations for the current trading period, due to increased finished goods holdings. Distribution costs were also in excess of expectations due to the continuing impact of fuel levy charges, the company said.
Patties said that the development of new products had had a short-term negative impact on operational efficiency. The company also attributed the below-par performance to abnormally warmer weather in the last two months of the calendar year and the intensity of discounting among its competitors.
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