RFG appetite grows
RETAIL Food Group is looking to devour more food businesses after the success of its Victorian food service acquisition.
The Gold Coast-based food franchise giant said underlying revenue surged almost 16 per cent and the group’s net profit growth were underpinned by “positive earnings” from its Hudson Pacific Corporation buy.
RFG in August shelled out $86.4 million to buy HPC.
RFG posted a $33.5 million half-year net profit, up 17.3 per cent on a year earlier.
The group, which owns Gloria Jean’s Coffees, Donut King, and Crust Pizza brands, said revenue from operations rose 4.9 per cent to $175 million in the six months to December 3.
Shares in RFG rose 22¢ or 53.56 per cent to $6.40 after the solid result.
Managing director Andre Nell said RFG is “well placed” to take advantage of acquisition opportunities.
RFG at its November annual meeting said it was evaluating 50 businesses, 12 of them seriously. It said 12 potential food distribution and coffee acquisitions were in advanced due diligence.
Mr Nell yesterday did not reveal details but said RFG was dealing with “a number” of third parties about potential purchases.
He said the company’s “near-term focus” is on similar food businesses, specifically “franchise, food service and coffee and allied beverage opportunities”.
RFG also hopes to leverage the HPC buy to access new domestic and international growth markets and open export opportunities.
RFG also is looking at international acquisitions “where compelling”.
Mr Nell said global markets offered RFG “a significant untapped opportunity” to expand into new areas.
The food franchisor said it is cashed-up to fund fresh acquisitions after lifting its debt by $40 million to $120 million.
The performance of Michel’s Patisserie, one of the group’s oldest brands, took some shine off the result, with sales and revenue down around 12 per cent.
RFG said revenue was hit by the move from a central bakery to an in-store operating model and the introduction of “market disruptive technology” including an in-store image printer and plans to roll out 3D chocolate printers.
“We remain enthused by (Michel’s) prospects notwithstanding these market-disruptive technologies,” Mr Nell said.
RFG added 138 franchise outlets in the half, taking its global footprint to 2556 outlets.
Its global reach grew to 78 territories after adding nine licences across 10 brands.
The group has stitched up a deal with fuel supplier BP to see its Brumby’s Bakery, Donut King and Gloria Jean’s coffees sold through BP’s 1400-outlet network.
RFG in December opened in two outlets which Mr Nell said “generated strong sales”.
Mr Nell said the partnership is “a non-traditional growth avenue” RFG is keen to explore.
RFG, which is moving its global headquarters from Southport to the former Gold Coast Bulletin headquarters at Molendinar, said the fit-out is under way and its staff should move into the building late this year.
RFG declared an interim fully franked dividend of 14.75¢.