Patties Foods (PFL) has done the right thing by dropping plans to pay an interim dividend until it sorts out the cost and other problems associated with the its Chile/Chinese berry hepatitis poisoning scare.
The company paid an interim dividend of 3.2c a share for the first half of 2013-14, but this year shareholders will have to wait until the current mess is sorted.
“Due to the current uncertainties around the potential but as yet unknown effects resulting from the voluntary frozen berries recall, the board has prudently determined to defer consideration of an interim dividend until matters and their financial impacts become clearer,” the company told the market in yesterday’s interim profit announcement.
And the situation remains unclear.
Chairman Mark Smith said tests were currently being conducted to identify a link with the Hepatitis A outbreak and the Nanna’s berries product. Mr Smith said, “Patties is acting in full cooperation with the State and federal health authorities, the department of agriculture and FSANZ.
"Whilst the source of the Hepatitis A virus is still unconfirmed, further detailed tests are being conducted by Patties Foods and the relevant authorities,” he said.
PFL 1Y – Prudent Patties omits dividend
The company said first half profit fell 6% to $8.2 million, but that was earned in the six months to December, before the scandal broke.
The company recalled its Nanna’s mixed berry products a week ago after a number of Australians fell ill with Hepatitis A after reportedly eating the imported berries. It has been in full damage control ever since.
Patties said first half earnings before interest, tax, depreciation and amortisation fell 6.2% to $16.9 million .
That was on a 9% rise in revenue for the half year to $138.1 million.
CEO Steven Chaur said the results were in line with the business strategy which was in a “restore basic conditions” phase.
"Of significance in the first half was our decision to comprehensively reorganise the Patties Foods business structure," he said.
"Although this strategic organisational review did result in restructuring costs, the key focus was to improve our decision making processes, speed to market on innovation, reduce business complexity, increase productivity and to reduce our fixed cost base," he said.
The company said it expected revenue to increase in the second half as it rolls out new pie products, but the financial impact of the voluntary recall was impossible to ascertain, "although it is possible that ultimately the impact could prove to be material” the company said.
Patties shares eased 2.8% yesterday to $1.25, after being down 4% at one stage. They are down 12% since the berry problems emerged almost a fortnight ago.
