Griffin’s posts biggest profit under PEP owners, no plans to sell

Griffin's Foods – the maker of Gingernuts, Mellow Puffs, Huntley & Palmers crackers and Eta brand snacks – last year posted its biggest annual profit under Australian private equity owners, who have no plans to cash up in the immediate future.

Net profit more than doubled to $20.5 million in calendar 2012 from $8.2 million a year earlier, according to holding company NZ Snack Foods Holdings' financial statements lodged with the Companies Office.

That is the biggest bottom-line profit posted by the biscuit maker under Pacific Equity Partners' ownership that started in 2006, and the highest since 2003, when it reported under different accounting rules.

Griffin's lifted sales 6.2 percent to $293.4 million in 2012, while finance costs dropped 30 percent to $15.5 million, the lowest since PEP bought the company and replaced about $100 million of intercompany debt with about $234.5 million in bank loans.

The company's bank debt peaked in 2008 at $311.2 million and was $234.6 million as at December 31.

Last week the Wall Street Journal reported PEP is preparing to refinance Griffin's through either a syndicate of Australian and New Zealand banks or through the US term loan B market, which typically involves financial institutions rather than banks.

PEP abandoned a sale of Griffin's in 2011 after struggling to find a buyer. It was reportedly looking for a price in the range of seven to nine times earnings, which were about $108 million at the time.

A source close to PEP said there were no immediate plans to sell Griffin's.

Since buying the snack foods maker, PEP has grown sales 66 percent, taking on just one acquisition in 2007 when it bought the Nice & Natural Wrapped snacks business for $55 million. As at December 31, Griffin's valued its goodwill at $252.6 million and its brands at $134.2 million.

Gross margins improved to 54 percent in the 2012 year from 51 percent when Griffin's was still owned by French food group Danone.

Griffin's operational cashflow shrank to $15.4 million from $35.5 million after the snack food maker paid $15.2 million in income taxes and $2.5 million in use-of-money interest to Inland Revenue.

In 2010 it reported its biggest operational cash flow of $44.3 million, while in 2008 it had an operational outflow of $31 million due to thin margins and high interest payments.

(BusinessDesk)