Food Group growing in uncertain market
Market watch top headlines
Stocks to watch
SYDNEY, Feb 21 AAP
February 21 2013, 3:20PM
Retail Food Group (RFG) is optimistic about growth after reporting a 0.7 per cent increase in first half net profit to $14.6 million.
The franchisor of brands such as Donut King, Michel's Patisserie, Brumby's Bakery and bb's cafe said total revenue was $60 million, a 21.2 per cent increase on the previous year.
RFG said core earnings before interest and tax, which excluded one-offs such as corporate restructuring and redundancy costs, grew 13.3 per cent to a record $27.9 million.
"(That) was a satisfying result given the challenged economic environment and the continued stultifying effects of a depressed retail landscape, which we believe will continue for the entirety of calendar year 2013," said chief executive Tony Alford.
At 31 December RFG had 1,391 franchises, with 175 of those by the acquisition of Crust Pizza and New Zealand brand The Coffee Guy.
Average weekly sales grew across Donut King, bb's cafe/Esquires, Michel's Patisserie and Brumby's Bakery even though customer numbers were down.
"Repeat customer visitations are declining, visits to shopping centres are declining; however, RFG brand systems are enjoying increased average transaction values as a result of new customer growth, and enlarged menus which encourage increased spend per visit," Mr Alford said.
He said this was particularly evident in the Donut King brand, where average weekly sales growth was 4.8 per cent, while the average transaction value rose 5.9 per cent.
That brand was part of RFG's program to manage the difficult retail environment, which includes drive-through cafes and standalone stores.
Michel's Patisserie in Queensland cost $2.4 million in administration of failed supplier operations, which Mr Alford said had now stabilised.
"Michel's Queensland performance was influenced by supply chain challenges following closure of the third party bakery supplier who serviced the state," he said.
"We anticipate a significant increase in average weekly sales growth and franchise revenue from the Michel's brand generally."
Flooding this year in northern NSW and Queensland affected 30 RFG outlets, with eight stores temporarily closed due to flood damage and supply chain delays, and two more remain closed due to significant damage.
However, RFG said the outlook was positive.
"The company is optimistic that the structure and growth platforms developed in 2012 will deliver a strong second half performance," Mr Alford said, adding that the company was not in a position to provide guidance due to a challenging retail environment.
A fully franked interim dividend of 9.5 cents will be paid, up from 8.5 cents last year.
By Neda Vanovac