Mr Chips warns of profit dip

French fry and vegetable processor Mr Chips today warned its half and full year results will be "significantly lower" than last year.

The news came as the company said its was mulling a potential takeover of another food processing business.

Mr Chips said excessive inventory levels and a six-month construction delay of its East Tamaki coldstore had taken a bite out of its bottom line.

Inventory levels are expected to be back to normal by February, and sales are expected to exceed last year.

The coldstore construction is 50 per cent complete and will be fully operational by March 2006.

"While this season has been difficult we remain confident that previous forecasts can be achieved in full year to March 2007," Mr Chips said.

Discussions with the unnamed takeover target were described as "preliminary".

Shares in Mr Chips last traded at 83c on Sepember 23, a year low. That compares with a share price of $1.25 a year earlier.

The company, which manufactures and distributes french fries, fresh potato products, fresh vegetables, potato wedges, snap frozen vegetables and meat products, reported a lower than expected $2 million profit in 2004.

- NZPA