Edgar to announce moves at Mr Chips

Friday 6th July 2001

By Chris Hutching

One of the smaller listed companies, Mr Chips, is likely to announce new initiatives and further acquisitions at its annual meeting in Auckland today.

"We had a great year and there are some new opportunities that have opened up for us and I'll be talking about at the meeting," chairman and major shareholder Eion Edgar said yesterday.

As its name implies, Mr Chips processes and markets potato products, including french fries, prepared vegetables, quick frozen vegetables, kumara fries and Silver Fern-branded meat products sold mainly in New Zealand but also in Australia, the Pacific Islands and Asia.

Mr Chips has experienced fluctuating fortunes in recent years but this year it reported a 27% improvement in net profit from a 13% increase in sales locally and overseas. Increased sales in the current year should be helped by a recently completed $1 million expansion of its East Tamaki factory. Costs are affected by packaging and the spot price of oil.

In the year to March, 2001. Mr Chips reported an after- tax profit of $1,284,554 on sales of $20.1 million. The total dividend was 6.5c a share fully imputed.

Mr Edgar is forecasting an improved forecast in the current year based on increased sales of new specialty potato lines. He described as "incomprehensible" a recent Commerce Commission decision allowing the merger of the country's two largest potato operations when McCain Foods (NZ) bought the Heinz Wattie's potato and vegetable processing factory at Feilding. The commission noted Talleys was another new entrant and competitors such as Mr Chips would ensure McCain's is constrained from obtaining market dominance. Mr Edgar said the move was unlikely to adversely affect Mr Chips and might lead to new opportunities.

LEK Consulting calculates the shareholder rate of return for the past year at 42.8% with a three-year return of 21.9% and a five-year return of 27.2% per annum.

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