Forex provisions hit QAF earnings
Singapore
QAF Ltd, better known for its Gardenia Bread, reported a 13 per cent decline in net profit to $30.19 million for the full year ended Dec 31 due mainly to its provision for unrealised foreign exchange loss.
The group's revenue for 2013 rose 4 per cent from a year ago to $1.02 billion as the company recorded higher sales in all its business segments.
All of its bakery operations in Singapore, Malaysia, the Philippines and Australia achieved higher sales with new product launches, increased production capacities and increased market share.
Its Australia-based integrated meat producer, Rivalea (Australia) Pty Ltd, achieved sales increases while its trading and wholesale arm, Ben Foods (S) Pte Ltd, also marked higher sales in its food service and export businesses.
But QAF had to make a provision of $5.4 million for unrealised foreign exchange loss arising from the depreciation of its Australian-dollar denominated assets against the Singapore dollar. The preceding year recorded a forex loss of $1.5 million.
Rivalea also experienced margins squeeze from weaker-than-expected selling prices in the earlier part of 2013. Higher costs of animal feed and grain at Rivalea and increased ingredient costs at QAF's bakery operations mainly contributed to the 7 per cent rise in total costs of materials for the group at $558.5 million.
Profit before tax for the year fell by $6.2 million to $42.05 million as a result.
But QAF said that selling prices at Rivalea showed "encouraging signs of improvement" in late 2013.
"The group's bakery operations maintained its level of profitability despite facing higher ingredient and raw material costs in FY2013 as compared to FY2012," QAF said in its financial statement yesterday.
QAF said it is expecting less volatility in raw material and other operating costs for this financial year and expects to achieve "an encouraging level of profitability in FY 2014".
The group has proposed a final dividend of 4 cents per share, unchanged from a year ago.
Shares of QAF yesterday closed 0.5 cent higher at 82.5 cents.
