Shares in Patties Foods Ltd (PFL), the Four’n’Twenty pie and pastry products company, had jumped by more than 7% at the close yesterday after opening weaker in the wake of the release of its 2013-14 interim profit report.
But after investors digested the news that the company had confirmed it was still expecting a second half improvement, an early fall was unwound and the shares rose through the rest of trading, despite the wider market being very mixed to uncertain.
They closed on $1.33, up 7.3%, which was one of the stronger rises on the day.
A steady interim dividend of 3.2c a share also helped investor confidence.
PFL 1Y – Patties Foods holds dividend steady after small profit fall
Patties’ brands include Four’N Twenty, Herbert Adams, Nanna’s, Patties, Creative Gourmet and Chef’s Pride products that dominate their categories in supermarket freezer cabinets.
Patties said that revenue rose 0.9% in the half year, despite the loss of a major private label frozen fruit contract.
"Profit Margins were slightly reduced impacted by capturing value segment growth opportunities, In Home channel margin pressure and input cost movements," directors said.
"This was partially offset by improved manufacturing performance and sales price increase," the company told the ASX.
Net Profit After Tax (NPAT) of $8.755m was down $0.3m (3.3%) on the previous corresponding period.
"This equates to a 7.5% reduction versus last years’ underlying NPAT," the company said.
That was both better and worse than the forecast at November’s AGM for a fall of around 5% for the half year.
"We currently anticipate in H2 F14 (the second half of fiscal 2014) to at least match last year’s second half underlying NPAT (net profit after tax)," Patties said yesterday.
Patties said second half profit would be boosted by the launch of new products, price increases, cost controls, and the benefits from a recently completed robotic packing equipment project.
In truth the shares had a good day because there was no repeat of the surprise losses and profit downgrades seen in 2012-13.
