Asian recovery boosts Cedenco's profit to $2.2m

By DITA DE BONI

Australian tomatoes have again had a decisive impact on the results for the September year of Gisborne-based food ingredient company Cedenco.

Despite a net profit increase of 60 per cent - to $2.21 million from $1.38 million last year - wet weather across Victoria and New South Wales resulted in a shortfall in supply to the Australian tomato processing industry. That reduced the Australian profit contribution "to well below expectations," according to the company.

Last year, a bumper season for tomatoes helped reverse Cedenco's $1.9 million loss in 1996-97 by processing a record 115,000 tonnes of tomatoes and contributing to half the total Australian tomato paste production for the year.

Two-thirds of Cedenco's assets are in Australia, and operations there will undergo further rationalisation to definitively to turn around a track record that has "not been too snappy for the past two or three years," chairman Basil Logan said.

Cedenco reported a rise in overall sales for the year of 44 per cent to $9.4 million, with shareholder funds increasing to $23.8 million.

Driving the increase in turnover was a 45 per cent gain in sales volumes to recovering Asian economies, notably Japan.

Cedenco's recently formalised five-year supply agreement with Heinz Wattie's to process sweetcorn and peas at its Gisborne plant is expected to add $7 million to the company's coffers when it begins in November 2000.

Cedenco is discussing additional processing possibilities with Heinz Wattie's, including frozen capsicum, onion, broccoli and organic vegetables.

The company - which is 48.5 per cent owned by Brierley Investments - says it is debt-free and well positioned to take part in further industry rationalisation within Australia.

In a briefing after the results were announced, Mr Logan tipped a share buyback next year and suggested that if Brierley ever did divest, Northern Hemisphere buyers would be interested in Australasia's "counter-seasonal" ability to grow vegetable crops.

"Given the restructuring we've gone though, an off-market pro-rata purchase of shares is both justified and appropriate."

Cedenco shares were trading up 3c to 87c yesterday after the results announcement.