Maggie Beer Holdings relishes return to profit

Maggie Beer Holdings relishes return to profit

Maggie Beer Holdings (ASX: MBH) CEO and managing director Chantale Millard.

After reporting a $14.8 million loss this time last year, iconic Australian food company Maggie Beer Holdings (ASX: MBH) has turned its fortunes with a return to profit of $1.9 million in FY21 as its cheeses, yoghurts, gourmet oils, sauces and spices reached palates through more channels than ever before.

Trading EBITDA almost tripled to $3.1 million, but with the successful integration of its recent acquisition Hampers & Gifts Australia (HGA) and steady growth online, the group is forecasting this figure to be up five-fold in the current financial year to hit $13.5-15.5 million.

The outlook contrasts with a previous loss mostly driven by a $12.1 million non-cash impairment to its Paris Creek Farms (PCF) business, a dairy company that went through a "cost reset" and is now gaining traction as MBH's second-largest sales source with its loss down to just $300,000 in the red.

PCF's growth was also impacted by its private label business review in the June quarter and a decision to no longer pursue unprofitable white milk arrangements - actions that have impacted factory overheads in the short term but which management see as putting the business in a stronger position for the future.

Net sales for the group rose 18 per cent to $52.9 million, of which almost half came from its eponymous brand Maggie Beer Products (MBP) that had faster growth still at 23 per cent.

The best performing category in the MBP range was cheese, up 50 per cent on FY20, while the core portfolio of products including cooking stocks, fruit paste and pate continued to achieve solid year-on-year growth.

The launch of MBP's new e-commerce platform in early November 2020 gave consumers an enhanced and much improved shopping experience, contributing to a more than doubling of online sales.

Net sales of the group's St David Dairy (SDD) brand were up 10 per cent despite COVID-19 impacts, but a loss on raw milk 'swap' sales led to an 18 per cent decline in earnings to $900,000.

"FY21 saw all of the MBH’s businesses perform well, with strong growth across the group," says CEO & managing director Chantale Millard.

"With the successful integration of Hampers & Gifts Australia complete, we now have a large premium e-commerce business that can be quickly scaled at the same time as we grow our retail grocery business."

Signs have looked promising more recently as well despite lockdowns which have affected all businesses to varying degrees. Group sales were up 62 per cent year-on-year in July. Meanwhile, the HGA business saw its sales up 36 per cent in the same month.

On a pro forma basis, including the Hampers & Gifts Australia business lifts combined results for FY21 to $86.7 million in net sales and $12 million in trading EBITDA.

The division will be launching its new Christmas hamper range and revamped ‘everyday’ hamper range in September 2021, containing approximately 10 of MBP’s products, as well as new products developed between MBP and HGA that are exclusive to the hamper range.

Both these divisions' marketing teams have been fully integrated, with HGA managing the digital marketing for MBP since the start of July. In the same month, the MBP e-commerce business was relocated to Sydney in July to enable better customer service and improve delivery times, while HGA implemented its new enterprise resource planning (ERP) system.

"We are looking forward to FY22, with exciting growth prospects for Maggie Beer Holdings combined e-commerce and retail grocery businesses, as we push towards $100 million in revenue over the next 12 months," says Millard.

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