Baker turns corner after four low years

CHRISTCHURCH - After four years of disappointing earnings, Christchurch baker Ernest Adams is promising a richer cake.

In the face of a takeover offer by Goodman Fielder, it said earnings before interest and tax in the first five months of the present year, April to August, were the best in five years - about $800,000.

This compared with a loss of $300,000 in the same period last year, and profits of $500,000 in the 1997-98 year.

Chairman Michael O'Neill and joint chief executive Keith Jackson said the company had increased its revenues - and market share - in New Zealand as well as exports to Australia and Japan, and had also reduced operating and fixed costs.

Responding to claims by Paul Bevin of Tower Asset Management, the largest shareholder, that Ernest Adams lacked the economies of scale to compete strongly against larger international brands, Mr Jackson said the group was increasing its market share in New Zealand.

Mr Bevin said Tower agreed that Ernest Adams was achieving a good earnings recovery this year.

"But that is allowed for in the $2.35 valuation [Goodman Fielder's offer price] and the question mark is not over earnings this year but longer term." - NZPA