Revenue rose but profit margins fell for TasFoods Limited as coronavirus-dampened customer activity and supply chain issues bit in the December quarter.
The Launceston-headquartered dairy and poultry company told the ASX sales revenue for the quarter was 7 per cent higher than in the corresponding quarter a year earlier.
Revenue growth was driven by an 8 per cent increase in poultry division sales and a 5 per cent lift for the dairy division.
Even so, the gross profit margin fell by 27 percentage points.
TasFoods said that was because of increased labour, freight, grain and milk prices.
It said the board and management were continuing to review the supply chain to ensure the best available pricing, but "revenue enhancing strategies" to improve the gross profit margin would take some time to improve operating performance.
"COVID-19 continues to negatively impact the business, with subdued customer activity across all channels, particularly food service and hotel-restaurant-cafe channel, with many also experiencing labour shortages," TasFoods said in a recent business activity report.
"Input costs rose through the quarter, particularly in poultry, as supply constraints further up the value chain experience limitations."
It said the company's new leadership team had nearly finalised a business review and strategy that would help it grow further into the wider domestic market and the export market in time.
"Notwithstanding supply constraints, our new organic chicken products continue to receive strong customer feedback and new product development focused on sustainable consumer growth trends will be a focus of the TasFoods strategy going forward," it said.
It said its Betta Milk business was in a highly competitive market sector and continued to face competitive pressures from low-priced private label brands in grocery stores.
Receipts from customers totalled $18.66 million for the quarter.
Net operating cash outflows increased to negative $2.23 million.
The company had $1.4 million in cash and unused finance facilities of $2.5 million at the end of the quarter.
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Sean Ford
The Advocate Newspaper, Tasmania. Business, economics, politics, crime.
The Advocate Newspaper, Tasmania. Business, economics, politics, crime.
