AU Food giant Simplot's $91m profit
Simplot Australia, one of the biggest suppliers to supermarket chains Coles, Woolworths and IGA, has…Simplot Australia, one of the biggest suppliers to supermarket chains Coles, Woolworths and IGA, has tripled its annual profit to $91 million, thanks to heavy cost-cutting and the sharp slide in the Australian dollar. The maker of the Chiko roll and big food brands such as Birds Eye, Edgell, John West, Lean Cuisine and Leggo's, is owned by United States food giant J.R. Simplot, which entered the Australian market 20 years ago.
The latest set of financial accounts filed with the Australian corporate regulator show that sales increased 4.3 per cent to $1.29 billion for the 12 months ended August 29, 2015. Net profit after tax reached $91.1 million, up from $33.2 million a year earlier.
Simplot Australia managing director Terry O'Brien said the company achieved solid growth in several of its main categories, but the strongest performers were frozen vegetable brands Birds Eye and Edgell, along with canned fish brand John West.
Simplot also has private-label contracts for frozen vegetables with Coles and Woolworths and this line of business was crucial to keeping the Australian factories operating through difficult times 2½ years ago, when the parent company considered a potential closure and a shift of the operations to New Zealand.
Mr O'Brien said conditions were still highly competitive in the industry, and for the first few months of trading in the new financial year the company was running solidly.
Simplot Australia operates factories in Tasmania, NSW and Victoria and Mr O'Brien said he was continuing to watch costs closely.
The company trimmed about a dozen jobs from an Ulverstone plant in Tasmania in October 2015. But the big cost-cutting came in late 2013, when it cut about 200 jobs at its plants in Bathurst, NSW and Devonport, Tasmania.
It contemplated a shift of some manufacturing operations to New Zealand at the time, in a similar move to rivals Heinz and McCain, but decided against it. Redundancy costs dropped in the latest financial year to $6.85 million, from $22.8 million in the previous year, when the main restructuring moves happened.
Simplot Australia had a $36 million "positive swing" in unrealised foreign exchange gains, largely caused by the drop of the Australian dollar against the US dollar over the 12 months.
Simplot Australia paid $34.9 million in tax in its financial year ended August 29, 2015, up from $9.62 million the previous year.
Mr O'Brien said Simplot Australia had about 60 per cent of the frozen vegetable market in Australia.