Staff cuts might be on the horizon for My Food Bag, an analyst says. Photo: Facebook / My Food Bag
Subscription-based meal kit and food business My Food Bag Group's profits have fallen 60 percent as it applies to be delisted from the Australian stock exchange.
Chairman Tony Carter said the business had faced a challenging year and will not pay a final dividend to shareholders.
Key numbers for the year ended March compared to a year ago:
- Net profit $7.9m vs $20m
- Revenue $175.7m vs $194m
- Operating earnings $18.2m vs $34m
- No dividend vs 4 cents per share
Carter said consumer demand had softened in response to tougher conditions.
"Inflationary pressure on households and low consumer confidence have resulted in subdued demand, driving diseconomies of scale within the business," he said.
The company had invested in technology to offer more choice and flexibility to drive performance, he said.
However, the subdued demand and investment costs had impacted on cashflow.
"Given this, the board has taken the prudent approach not to pay a final dividend for the FY23 year," he said.
"We expect to see free cashflow strengthen over FY24 and to resume dividend payments in the coming year."
The company has also applied to delist from the ASX as it reviewed its spending.
"Delisting from the ASX will save the business money and is consistent with the review of our cost base to identify cost-saving initiatives.
"Trading in the company's shares on the ASX has poor liquidity and low daily trading volumes, so the board considers the cost of continuing a listing on the ASX outweighs the benefits."
The company would remain incorporated in New Zealand and listed on the NZX.
Forsyth Barr analyst Margaret Bei said the number of My Food Bag's active customers fell 7 percent over the year, including a softening in the high value customer base, contributing to the fall in profits.
Deliveries fell 12 percent, partially impacted by the Omicron outbreak of Covid-19, with reduced retention of customers, she said.
"MFB pointed to inflationary pressure on households and low consumer confidence as key drivers of subdued demand."
The company has not provided earnings guidance, however Bei expected cost-cutting measures, including cutting 10 percent of the workforce, corporate cost reviews, delisting from the ASX and re-evaluating marketing spend would benefit the company's cashflow.
