The group will axe a planned dividend after a squeeze on profits Photo: Facebook / My Food Bag
Meal kit business My Food Bag Group half year profit has more than halved as customers opted for cheaper products denting revenue.
Key numbers for the six months ended September compared to a year ago:
- Net profit $2.5m vs $5.9m
- Revenue $83.8m vs $94.4m
- Gross margin 47.9 % vs 49.3 %
- No dividend
Chair Tony Carter said they had moved to stabilise the business in the first half after demand was hit by the higher cost of living prompting a rethink of operations including job losses, new technology, and consolidation of work sites.
"Despite the deteriorating economic environment, the first half of the year has been a successful period of transition as we stabilised demand and began to steadily grow active customer numbers."
"We remain a profitable business with a strong brand and customer offer, and continue to proactively reduce costs, while also growing our offering to New Zealanders," he said.
Marketing has been focused on its basic meal kit offering, with a price freeze to improve sales. The company said it now had 61,600 active subscribers, an increase of 4,100 since the start of the year, but revenue and underlying earnings were lower.
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 continued its freeze on dividends buy Carter said the aim was to pay one at the end of the current financial year depending on its performance and debt position.