Pies earn a nice crust for Patties

Teresa Ooi
August 28, 2012
The Australian

CONSUMERS still have an appetite for Four’N Twenty meat pies, with manufacturer Patties Foods increasing full-year net profit 6 per cent to $19.5 million.

Revenue was up 8.8 per cent to $235.8m, while earnings before interest, tax, depreciation and amortisation rose 5.6 per cent to $38.7m. This was marginally above average market expectations of $38.5m, based on a survey by Bloomberg.

“In a trading environment where consumers continue to shop for value, strong revenue growth of 8.8 per cent has been achieved through product innovation, new contracts and growth in branded products,” managing director Greg Bourke said.

The company will pay a fully franked final dividend of 4.4c per share, up from 4.2c previously.

Patties said that automated packing technology had improved manufacturing efficiency and it had launched 17 new product lines, with another 20 to be introduced next year.

Patties brands include the premium Herbert Adams offering, Nanna’s, Creative Gourmet and Chef’s Pride. It supplies supermarkets, petrol stations, convenience stores and sporting venues.

“We are finding that consumers shopping in supermarkets are increasing their buys when products are on promotions,” Mr Bourke said.

“Trading conditions remained difficult as consumers shop for value in supermarkets and stick to premium brands they trust.”

Patties has about 50 per cent market share of meat pies sold in supermarkets, valued at $170m, and about 39 per cent of meat pies sold at petrol stations and convenience outlets, estimated at another $100m.

Mr Bourke said its meat pies were quite resilient despite tough retail conditions, and he expected steady growth in its savoury category of about 3 per cent to 4 per cent next year.

Four’N Twenty is the top-selling pie in supermarkets, convenience stores and football grounds across the country.

Patties intends to boost research and development to drive the launch of new products.

It would also focus on increasing exports, including British sales.

Mr Bourke said the company was disciplined in controlling costs. Net debt has increased to $70.5m, from $59.7m previously, because of a boost to capital expenditure.

Patties’ share price rose 2.5c to $1.59 yesterday.