Having completed its exit from the frozen fruit category this year, Patties Foods’ year end results show it is on course to drive growth in F17.
In December 2015, the company announced it would exit frozen fruit and sell its Creative Gourmet brand. Over the financial year, the company has worked to mitigate the effects of its frozen berries recall in February 2015.
The business is now concentrated on driving its core bakery business, with iconic brands such as Four’n Twenty, Patties, Herbert Adams, Nanna’s and Chefs Pride.
Steven Chaur, MD and CEO of Patties Foods, said: “Our core bakery business continues to perform solidly over the past 12 months through our focused strategy in delivering premium savoury innovation, creating customer differentiation, operating a leaner organisation and achieving continuous improvement programs in bakery”.
Savouring success
Over the past 12 months the company has launched 46 new savoury products. Of note, Four’n Twenty grew the brand’s Out of Home revenues by 20.3 per cent through the launch of its new sous vide slow cooked ‘Real Chunky’ range in the petrol and convenience channel. Out of Home has grown to 38 per cent of company revenue (from 34 per cent in 2015).
In the grocery channel the release of a new ‘Super Chunky’ pie range, a limited time cheeseburger pie and an Australia-shaped party pie for Australia Day grew brand revenue by 7.1 per cent.
With 15 per cent share of total supermarket frozen sales, the premium Herbert Adams brand continues to grow strongly at 21.6 per cent.
The Patties brand, which is celebrating its 50th birthday, grew revenue overall by 6.2 per cent.
Solid results
The company ended the year with an underlying core bakery EBIT (excluding frozen fruit) of $25.4 million (up 15.1 per cent on F15) and a total debt position of $60 million, the lowest debt since 2011.
Cash flow from operations improved to $27.2 million (a net improvement of $21.9 million compared to the previous year) and reduced total inventory (down $14.4 million to $35.5 million) driven by the frozen fruit exit, improvements in core bakery performance and a lower meat inventory.
Commenting on the results, Patties Foods chairman, Mark Smith, said: “The solid and increasing underlying 15.1 per cent EBIT growth in our core bakery business is very pleasing given our increased investment in brand marketing and product innovation. The decision to comprehensiveness re-structure the business 12 months ago continues to deliver effective cost control and operational efficiency improvements.”
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