Battered Mr Chips says future looking better

Despite a bruising two years, Mr Chips says the company's outlook is encouraging.

Chairman Graeme Edwards told the annual meeting in Auckland yesterday: "The outlook for the remainder of this financial year looks encouraging, with the Australian dollar exchange rate and inventory finely balanced against the sales programme."

The company said it was conscious the Australian dollar cross rate was below its long-term average and had taken out forward cover and options, both of which were in the money.

"We are now consistently achieving our sales budgets and have continued to diversify our customer base, particularly in Australia," Edwards said.

"We still have some work to do to lift margins but solid progress has been made since balance date." The "disappointing" 2006 result should be considered growing pains, incurred during three years when effective capacity trebled, matched by sales.

Mr Chips had renewed its contract with Restaurant Brands for four more years.

The company's forecasting, inventory and logistics management had been found wanting.

"These challenges have been significant and are amplified by the long lead times in sourcing our raw material." A coldstore should have been built at the same time as the new processing plant.

- NZPA