Global carbs and sugar king, Retail Food Group (RFG) has showered a plate full of goodies on shareholders, lifting full year profit, final dividend and revealing yet another acquisition to bolt on to its already vast group of food brands and snacks.
Investors loved the food group’s latest offerings and pushed the shares up 7.5% to a 12-month high of $6.42, a solid effort given the 20 point fall in the wider market, thanks to an afternoon sell off.
The company already owns food brands such as Donut King, Gloria Jean’s Coffees, Crust Pizza, Brumbies and DiBella Coffee and yesterday added what it claimed would be a “new dimension” by buying food maker and distributor Hudson Pacific for $88 million in cash and RFG shares.
After lifting earnings nearly 80% in the year to June, the final dividend of 14.5 cents a share (up 23.4%) was revealed, taking the full year payout to 27.5 cents a share.
Net profit for the year to June was up 79.1% at $61.3 million and the company issued guidance for underlying net profit growth of about 20% in 2016-17.
The eye catcher (besides the sharp rise in dividend) was the $88 million purchase of Hudson.
RFG said the new addition will bring in $139 million in revenue from the food and beverage distribution business that services over 2000 retail outlets and restaurants, and the 4000 products on offer.
Those products include cheese that is processed and packed by Hudson’s Dairy Country and breads and other chilled and frozen bread products made by the group’s Bakery Fresh operation. Hudson products would move into RFG’s more than 2,500 franchised outlets.
Underlying earnings before interest, tax, depreciation and amortisation (EBITDA) rose 24% to $110.2 million for the year to June 30.
RFG said Hudson would immediately add to profit and forecast an $11 million contribution to group EBITDA in 2016-17.
The company opened a record 258 new outlets in 2015-16, taking its total network past the 2,500 mark. Many of those are offshore as the company becomes more global, as CEO Andre Nell explained in yesterday’s statement.
“International and Coffee & Allied Beverage operations have not only flourished as significant earnings drivers in themselves, but represent key platforms upon which RFG will continue to enjoy success well into the future”, he said.
“RFG’s transformation into a global food and beverage company possessed of multiple earnings levers is best illustrated by FY16 Divisional EBITDA performance, where contributions from international franchise operations, coffee wholesale and Brand System coffee supply generated in excess of 50% of FY16 Group EBITDA”.
During 2015-16. the Company extended its global reach by growing international licensed territories to 69, following the grant of Master Franchise licences across Europe, the Middle East, Asia and the Pacific.
“Establishment of the Group’s International Division has not only facilitated enhanced traction in terms of converting new Master Franchise license opportunities, but also provided increased collaborative support to an engaged international network which contributed c.57% to record FY16 new outlet commissionings of 258, with considerable traction enjoyed in Turkey (20 outlets), China (18 outlets), the UK and Malaysia (14 outlets each)”, Mr Nell said.
