Veritas shares jump 16pc - says business improving

Sales at its Mad Butcher stores would fall to between $7m to $8m, from 2016's $9.8m.

Veritas Investments' shares jumped 16 percent after the food and beverage company affirmed its annual earnings guidance and said its three divisions are all showing signs of improvement.

Stripping out one-off and significant costs, profit from continuing operations is expected to be between $3 million and $3.5 million in the 12 months ending June 30, the Auckland-based company said in a statement. Veritas posted a first-half loss of $4.8 million when it took impairment charges and other write-downs totalling $5.3 million.

The shares climbed 5 cents to 36 cents, the highest level since February 17.

Veritas reviewed and restructured its operations after cutting its earnings outlook and dropping a first-half dividend payment, and today said all three of its businesses — Mad Butcher, Nosh and Better Bar Co — showed signs of improvement in the three months ended March 31.

For its Mad Butcher business, the company said the low-cost meat franchise still faced competitive trading conditions but lifted underlying profitability due to cost-cutting measures and marketing initiatives. Two unprofitable stores were closed, and a third is still on review, Veritas said.

The Nosh Food Market unit benefited from "operating efficiencies" within the segment, and since March 31 Veritas has embarked on rolling out a franchise model for the high-end supermarket chain.

"The levels of response have been encouraging with interest shown in both current stores and greenfield sites," Veritas said. "A rigorous selection process is now underway."

The Better Bar Co performed in line with expectations, while the winding up of Veritas's Kiwi Pacific Foods meat pattie joint venture with Burger King operator Antares Restaurant Group has begun, it said.

Veritas was formed in December 2011 through a reverse sharemarket listing with the aim of acquiring high-quality New Zealand retail and consumer businesses. It said it sought established businesses with strong, sustainable cash flows and considerable future growth opportunities. It bought the Mad Butcher franchisor business in May 2013, took a half share in Kiwi Pacific Foods in December 2013, acquired Nosh Food Market in September 2014 and The Better Bar Co in November that year.