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National Foods FY09 result

Lion Nathan National Foods (LNNF) today announced National Foods’ (NF) financial results for the 2009 financial year.


February 10, 2010

Lion Nathan National Foods (LNNF) today announced National Foods’ (NF) financial results for the 2009 financial year. These results reflect the one-time benefit of the acquisition of Dairy Farmers.

Net sales revenue of $3,562.2 million translated into EBIT of $164.6m1. The business consequently raised its return on invested capital from 1.9 per cent in the 2008 financial year to 4.3 per cent. The net profit after tax result will be finalised when NF lodges its statutory accounts with ASIC, which is required by the end of April 2010.

The benefit of increased sales due to the first time inclusion of Dairy Farmers was partially offset by an associated increase in production, distribution and marketing costs.

The reported result was impacted by one-time costs primarily associated with the Dairy Farmers and Lion Nathan integrations and also asset write-downs. Synergies from the Dairy Farmers integration process are on plan. Significant progress has been made against the previously disclosed target of $120 million and this contributed to the improved profit performance.

There were some significant successes during the 2009 year. NF’s iced coffee business continues to show positive momentum, with successful marketing campaigns for Dare Iced Coffee increasing volume by 28 percent and a new 750ml bottle of Farmers Union Iced Coffee launched in the third quarter returning the brand to growth.

NF also achieved some innovation successes targeted at growing category value, in particular the launch of Dairy Farmers New Milk in the third quarter. Dairy Farmers New Milk has a clear proposition for consumers wanting the taste and goodness of full cream milk but only half the fat2. Initial sales are encouraging and there is little evidence of cannibalisation of other brands in the Dairy Farmers’ white milk portfolio. The successful re-launch of Yoplait Form? was a further highlight.

However, National Foods’ primary markets, the dairy and juice sectors continue to be characterised by challenging market conditions affecting farmers and producers alike.

NF Managing Director Andrew Reeves said: “While the results are a significant improvement against the prior year, much of this growth reflects the first time inclusion of Dairy Farmers. The business is still some distance from delivering an acceptable return on invested capital.”

Andrew Reeves and the NF executive team have recently completed a planning exercise to position National Foods for growth.

Mr Reeves said: “The combination of National Foods and Dairy Farmers creates a leading branded dairy and juice business. Following significant progress with the Dairy Farmers integration, we are now well positioned to invest in our strategic assets to create a business fully focussed on the needs of customers and consumers.”

“We intend to increase our investment in a focussed portfolio of brands to better leverage our leading consumer propositions. We will also increase our innovation pipeline to widen the appeal of dairy and juice, build category value and fully leverage our route to market. We will also invest in people capability to deliver further improved experiences for customers and consumers”.

National Foods 2009 Financial Results (Jan-Dec 2009)
Sales Revenue$3,562.2 million
EBIT (pre significant items)$164.6 million
EBIT (post-significant items)$74.6 million
Return on invested capitalFY09: 4.3%FY08: 1.9%

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For further information, please contact:

James Tait
Corporate Affairs Director
Lion Nathan National Foods
Tel: (02) 9320 2236
Mob: (0400) 304 147

About Lion Nathan National Foods:

Lion Nathan National Foods brings together great household brand names including Tooheys, Wither Hills, Dairy Farmers, XXXX, PURA, Berri, Speight’s, King Island Dairy, Boag’s, Yoplait, Hahn and COON.

We believe that business success comes from investing in our people and brands and by constructively engaging our stakeholders. Lion Nathan National Foods employs more than 7,000 Australians and New Zealanders and delivers revenues in excess of AU$5.6 billion. Our products accompany life’s sociable moments, whether it’s a family meal or good times at the pub with mates.

Dairy, juice and responsible enjoyment of alcoholic beverages are all parts of a healthy lifestyle for most Australians and New Zealanders. Lion Nathan National Foods aims to maximise community wellbeing arising from the enjoyment of our products while playing a role in helping the community minimise misuse.

In addition to the direct employment we provide our people, our business makes a significant contribution to the Australian and New Zealand economies. We are one of the region’s largest purchasers of agricultural goods and an integral component of the retail and hospitality economies.