Lacklustre results from Burns Philp

- Last updated on GMT

Related tags: Burns philp, Generally accepted accounting principles, United states

Australia's largest food and ingredients company Burns Philp &
Co saw net profit rise by 16 per cent to A$170.0 million (€100m)
for the fiscal year ended June 30 but earnings were impacted by
acquisitions - not least Australia's largest food company Goodman
Fielder - and disposals.

Australia's largest food and ingredients company Burns Philp & Co saw net profit rise by 16 per cent to A$170.0 million (€100m) for the fiscal year ended June 30 but earnings were impacted by acquisitions - not least Australia's largest food company Goodman Fielder - and disposals.

On an acquisitive spree, the company purchased Kraft Foods International Fleischmann's yeast and industrial bakery ingredients business in Latin America in November 2002 and Goodman Fielder in March 2003. The moves played a role in the end of year sales figures which rose, from ordinary activities, by 45 per cent to A$ 1.8 billion.

A new kid on the block knocked the results for the North American region of the yeast and bakery ingredient group of Burns Philp which posted an operating income of A$72.8 million in North America, representing a 13 per cent drop from A$83.5 million in 2002 .

The rise of the new competitor - USA Yeast - has led to a dip in price levels for fresh yeast in the region. Burns Philp warned this week that it expects the 'competitive environment' to remain difficult for the foreseeable future with profits expected to decline.

In Europe the situation for the bakery and yeast unit was hardly better with figures affected by 'significant competitive pressures in Turkey'. Operating income in the region dropped from A$33.8 million in 2002 to A$30.7 million in 2003. But the company claimed that positive signs happenend in the final quarter with selling prices rising in the market and a return to profitability.

Turning to Latin America, Burns Philp reported that the recent Fleischmann Latin America yeast and bakery ingredient purchase is paying off. 'We are now the clear market leader in this region,'​ said the group in a statement on Tuesday. Adding that the new businesses are performing in line with expectations. Despite the words, operating income - A$12.7million in the region was down on last year 'reflecting the impact of currency devaluations, reduced volumes and restructuring costs'.

But Asia Pacific did witness growth with income rising from A$23.9 million in 2002 to A$30.2 million in 2003 thanks to 'organic growth and efficiency improvements'.

In herbs and spices, Burns Philp said operating income at its Tone Brother's North American business rose to A$58.2 million from A$54.7 million. At Goodman Fielder, the company said it expects various initiatives will deliver performance improvements of around A$70 million.

Related topics: Market Trends

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