By Phil Boeyen, ShareChat Business News Editor
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Tuesday 14th August 2001 |
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The company has reported an after-tax surplus of $11.7 million for the year ended June, up 22% on last year's $9.6 million but well down on its prospectus prediction of $20.4 million.
Operating revenues at $228.4 million are $36 million below the prospectus forecast, although they have increased 27% over last year's sales.
Frucor also reports its net surplus is 14% down on the normalised net surplus of $13.6 million for 2000.
The latest result shows once again how tough it has been to break into the UK market compared with the optimistic figures contained in the prospectus.
Forecasts had picked that the new age beverages category would account for $136.5 million in the 2001 financial year. Actual sales were well below this at $106.7 million.
The battle for Britain may well still be won by the company's high profile V energy drink but it won't come cheap.
Frucor says the UK business posted a $10.2 million Ebitda loss in the market, reflecting the upfront marketing investment required to establish the energy drink.
CEO Mark Cowsill says a further loss in this market is expected in the full-year to June 2002 due to continued brand investment, although the business should break-even in the second half of the year.
On the upside, Mr Cowsill says V is showing positive signs of growth.
"The business has made steady progress however achieving 47% weighted distribution by mid June, up from 25% in March with an encouraging upward swing in fourth quarter sales.
"Average ex-factory weekly sales of V energy drink have increased by around 60% between June and July. In the July Nielsen data, V energy drink achieved the number two position in the UK energy drink market for the four week period."
Frucor says based on estimates of the current market size of approximately 37.5 million litres for the daytime stimulation energy drink market, it is estimated that V drink has achieved a current value market share of 8-10%.
In New Zealand the company says it had a good all-round performance with operating revenues up 16.3% to $166.2 million and an increase in Ebitda of 17.2% to $30.6 million.
Sales of V continued to grow in the home market, as did sales of new products g-force Mizone.
Operating revenues in Australia grew 56.7% to $46.7 million with a corresponding increase in Ebitda of 92.9% to $10.8 million.
The company says the result reflects a one-off adjustment which reduced operating revenues by $8.5 million following an inventory buy-back from Spring Valley, V's original distributor. Adding this back would have generated growth of over 80%.
Frucor says its 'rest of world' performance registered an improvement in operating revenue to $5 million, up 66.7% versus the prior year.
V is now sold also sold in South Africa, Dubai and Hong Kong but the company says it has modest expectations in these markets, and has taken a low key investment approach. An Ebitda loss of loss of $1.1 million was recorded in these markets, again reflecting new market development costs.
Although lagging well behind earlier expectations Frucor says its outlook is promising, with anticipated growth in revenue and net surplus stemming from growth in new age beverages, new product launches and distribution gains in Australia, together with V energy drink growth in the UK.
The company sees plenty of scope for growing V in Australia too, where energy drink consumption is currently at a per capital level of 1.2 litres compared with 3 litres per capita in New Zealand.
It also reports the recent launch of the Mizone sports water product has been well received across the Tasman.
Frucor is planning increased marketing investment for its brands again this year, particularly in international markets, which it says will adversely impact first half earnings growth but will flow through to strong performance for the full year.
The company has declared a final dividend of four cents per share.
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