Ginger processor says profit growth will continue

The world's largest producer of ginger for confectionery, Buderim Ginger, said on Friday that it expects to see higher profits this year, thanks to the long-term improvements made through its restructuring programme.

John Ruscoe, chairman of the Australian company, told shareholders that the company is determined to build on the gains made in 2005 and expects to maintain higher margins on its ginger products.

In March, it announced a 56 per cent rise in profit to A$536,000, boosted by an A$1 million improvement in the ginger business. This was partly brought about by investments made in the processing infrastructure, as well as a "more benign" growing season that meant the firm received the right volume and quality of raw materials.

"We are particularly pleased that the work done over the previous few years finally produced the outcome we were expecting. This now appears sustainable," said Ruscoe.

Buderim has capacity to process more than 6,000 tonnes of raw ginger per year, and this remains its core business, with customers in the confectionery, food and beverage business around the world. In 2005, it had ginger sales worth A$29.8 million.

But it also diversified two years ago into the bakery business to lessen its dependence on ginger, buying up a specialty pie company, I Spy Pies, and the pre-prepared pasta meals maker Aldente Foods.

While revenue from this segment was above expectations at A$13.5 million, Ruscoe said that the profits came from strong sales at the pie business that masked results from the underperforming pasta products.

"Profitability from the combined businesses was disappointing, principally due to unforeseen issues involved in integrating the two businesses," said Ruscoe.

He said these issues are now being overcome and will not add further costs in 2006.

Ruscoe said that consolidation in all business segments is expected to result in continued improvements in profit over the coming year, although it won't be evident until the second half "in line with the normal trading cycle and the continuing improvements being made in bakery".

Recently completed ginger harvests in Australia and Fiji were 'good', added Ruscoe.

In addition, despite a struggling regional tourism market, the group anticipates improved revenue and profit from the Ginger Factory, one of the Sunshine coast's leading tourist attractions. The group reported in March that this unit had seen an 8 per cent rise in revenue to a record A$4 million.

"While we anticipate that conditions in our core ginger business will remain competitive, we are determined to build on the gains made in 2005," Ruscoe said last week.