Veritas downgrades earnings forecast; won't pay 1H dividend

Wednesday 27th January 2016

Veritas Investments, whose stock lost almost two-thirds of its value the past year, has downgraded its outlook for earnings as its food businesses struggle.

Underlying profit, which excludes one-time items, will probably be between $3 million and $3.5 million in the year ending June 30, down from a previous estimate of $5.3 million to $5.5 million, the Auckland-based company said in a statement. Underlying profit fell 4.3 percent to $4.3 million last financial year.

Veritas, whose assets include the Mad Butcher franchise, Nosh food stores, Better Bar Company and meat pattie supplier Kiwi Pacific Foods, said it won't pay a dividend for the first half of its financial year following disappointing trading. It expects to write down the value of its assets by $5.4 million and is seeking a chief executive as it works with external advisers PWC to review operations and bolster profits.

"The group as a whole experienced highly competitive market conditions during the first half of FY16 with adverse weather conditions impacting on the second-quarter results," the board said in the statement.

When Veritas affirmed its profit guidance in November, chairman Tim Cook said first-quarter trading was in line with expectations, and the second quarter, which includes the lead up to Christmas and the summer and barbecue season, was a more profitable period.

The company now expects underlying profit of between $900,000 and $1 million in the first six months of the financial year ended Dec. 31. The results will be released by the end of February, it said. While it's paying no dividend for the period this year, last year it made a first-half payment of 2.7 cents per share.

The stock last traded at 50 cents, valuing the company at $21.7 million.

BusinessDesk.co.nz

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