Foodland books lower net profit

MELBOURNE - Groceries wholesaler and retailer Foodland Associated Ltd today booked an annual net profit of A$95.3 million ($105.4 million) for 2004/05 - 33 per cent down on the prior year's net profit of A$142.7 million.

Foodland, which is currently subject to a A$3.3 billion carve-up by Woolworths and Metcash Trading Ltd, said the result was influenced by A$19.6 million in costs associated with the de-merger and transfer schemes currently under way.

Excluding these one-off costs and unusual items reported in 2004, net profit was 7.8 per cent higher at A$113.7 million.

The company did not declare a final dividend. The board has said it does not intend to declare any dividends prior to scheme meetings to be held later this year.

In the prior corresponding period, Foodland declared a partly-franked final dividend of 43.0 cents per share.

Total revenue for the year ended July 31, 2005 fell 1.5 per cent to A$6.73 billion.

"Despite the significant distractions of the negotiations that preceded the announcement of the schemes of arrangement and the scheme process that has followed, we have been able to report a result before corporate activity costs in line with the forecast shown in the February 2005 target's statement, prepared in response to the Metcash bid," Foodland managing director Trevor Coates said.

Mr Coates said it was pleasing that earnings from trading divisions for the second half of the financial year had risen 7.6 per cent to A$127.4 million.

Group ebitda (earnings before interest, taxation and amortisation) before unusual items for the 2005 financial year was A$250.5 million, which the company said was in line with the A$250.1 million forecast in Foodland's target's statement.

Foodland said its Franchise & Supply Australia business lifted second-half earnings by 13.4 per cent while progressive supermarkets lifted earnings by 8.6 per cent.

Franchise & Supply New Zealand increased full-year earnings by 16.8 per cent.

Action supermarkets reported a A$3.7 million drop in earnings due to a competitive trading environment.

Foodland said Australian supermarket sales for the year rose 2.59 per cent to A$1.36 billion, but EBITA fell 9.46 per cent to A$35.4 million.

The company said that in Western Australia, sales at Action stores continued to be influenced by the fuel discount schemes offered by other retail chains, which had increased in line with higher petrol prices.

In Queensland, where an Action fuel discount scheme is in place, the performance of recently refurbished stores in shopping centres was encouraging.

New Zealand supermarket sales for the year grew 8.5 per cent to A$3.6 billion, and EBITA lifted 6.9 per cent to A$159.3 million.

Progressive's supermarket banner groups - Countdown, Foodtown and Woolworths - had produced record results despite competitive trading conditions.

The Franchise & Supply business in Australia reported annual sales of A$1.4 billion - up 7.2 per cent. EBITA rose 9.3 per cent to A$49.2 million.

In New Zealand, Franchise & Supply annual sales gained 18.9 per cent to A$277.6 million and EBITA rose 16.8 per cent to A$11.8 million.

Foodland shares were 24 cents higher at A$26.86 at 11.12am AEST (1.12pm NZT) today.

- AAP