Inventory buyback to hit Frucor profit

By ELLEN READ

Beverage company Frucor is lowering its full-year net profit forecast because of a one-off inventory buyback by its Australian operation.

The company yesterday released interim results showing a net profit after tax for the six months to December 31 of $6.41 million.

The result was up 40 per cent from the $4.57 million reported for the previous corresponding period.

Managing director Mark Cowsill said Frucor now expected to report a net profit after tax of $17.5 million for the full year, down from the $20 million net profit forecast in the prospectus issued when the company listed last year.

A $3.5 million stock buyback linked with Frucor's acquisition of Australia's Spring Valley sales and distribution assets last year was the main cause for the lower forecast, he said.

Frucor's first-half earnings per share rose to 4.6c from 3.7c in the previous corresponding period. An interim dividend of 4c a share was declared for payment on March 23.

Revenues were 55 per cent higher at $120.7 million, with more than three-quarters of the increase stemming from so-called new age drinks.

Mr Cowsill said the first-half profit - about $500,000 below the forecast - was satisfactory given a shortfall in British sales and high marketing investment.

New Zealand and Australia performed well but Britain and South Africa suffered greater losses than expected, he said.

Frucor's share price fell a few cents after the news but recovered to close unchanged at $1.88 yesterday.

"I'm very happy. I think the results are very promising and a great platform for the future," Mr Cowsill said.

New Zealand operations should continue to see double-digit growth in the second half of the year. The Spring Valley acquisitions in Australia would improve profitability in the medium term and a distribution drive in Britain should lift revenue.