RFG DEVOURS EXPECTATIONS

RETAIL Food Group (RFG) has beaten forecasts by delivering a net profit of $16.5 million for core operations during the December half-year.

The latest result, a record for the Southport-based group, is up 10.5 per cent on a year earlier, and up from RFG’s own forecast of a 7.5 per cent profit increase.

But the statutory result has come in at $14.6 million, up 0.7 per cent, due to costs linked to problems RFG encountered with its Michel’s Patisseries production agreement.

RFG, owner of Donut King, Brumby’s Bakeries and Michel’s Patisseries, was forced to take over the baking operations for Michel’s during the half.

This led to RFG paying out $2.4 million in “financial accommodation” to Queensland franchisees of Michel’s due to supply disruptions.

RFG now has put in place a national bakery solution for Michel’s which RFG chief executive Tony Alford (pictured) says allows the company to control its own density.

The profit result should cheer RFG shareholders who have been rewarded with a 12 per cent lift in their interim dividend to 9.5c a share.

The half-year profit compares with $15 million a year earlier and has been driven by a 21.2 per cent increase in group revenue to $60 million.

RFG says the result has been buoyed by its acquisitions of The Coffee Guy and Crust Gourmet Pizza, as well as organic growth which added a combined total of 220 new outlets to the group.

Alford says he is confident the systems the company has put in place will continue to benefit shareholders in the current half.

He says the business across the board remains strong, with Donut King a standout performer.

However, he does warn that retail conditions remain challenging after a soft Christmas period.

“But it’s not as bad as what people have been playing to,” says Alford.

RFG is expecting to roll out a total of 80 new outlets across the group by the end of the 2013 financial year, a record for the group for organic growth. It already has added 45 new outlets in the first half.

Alford says no full-year guidance has been given, but he says “we’re pretty happy with where we’re going”.

The interim dividend will be paid on April 9, with a record date of March 21.