Australian confectionery ginger giant warns of profit plunge due to intense pressure from rising dollar, a sharp turnaround from the previous guidance that profits would rise in 2003.
The news follows hot on the heels of an announcement in August when shareholders were informed the company would turn in a $100,000 pretax loss for the six months to 30 June, claiming the appreciating dollar had prevented it breaking into the black for the first time in the June half.
"Directors of Buderim Ginger now expect the company's full year after tax profit to fall below that of the previous year by approximately 30 per cent," said Buderim chairman John Ruscoe last week.
Ruscoe added that with 60 per cent of revenue derived from export sales, Buderim continued to be impacted by the rising Australian dollar.
"Profits on these (export) sales will continue to be adversely impacted for the remainder of the year unless there is a sharp and substantial reversal of the recent currency appreciation. This is not expected," Ruscoe said.
Pressure from the dollar is not the only reason for the profit loss, claimed the company. Recent droughts - that have affected a large slice of the food industry - were also responsible. Ruscoe said that the drought-affected 2003 ginger crop was also proving more expensive to process.
The directors' outlook for the rest of 2003 was less than rosy with Ruscoe predicting a softening in demand in both the domestic and export markets."Due to these circumstances the level of the dividend will be recognised once the full year earnings are known, however it is now likely to be lower than previously forecast," he said.
For the six months to 30 June, 2003, Buderim posted a net loss of $133,000, compared with a loss of $131,000 previously. In 2002 Buderim reported a 40 per cent drop in net profit for the calender year to $770,000.
Troubled times with falling share price and sliding profits saw a boardroom coup at the company last month with three of the four board members who were nominated for replacement losing their positions. John Ruscoe - who led the company from 1982 to 1994 - stepped into the shoes of then chairman David Graham. Gerard O'Brien, the only member of the board not to be requisitioned for replacement, stayed on as managing director of the company.