Another day, another downgrade for dried fruit seller Murray River Group
Food & Agriculture
Food & Agriculture
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Dried fruit purveyor Murray River Group has issued yet another guidance downgrade.
Forecast sales revenue for 2018 is now in the range of $75 million to $80 million.
In November, the company downgraded revenue forecasts to between $87.5 million and $92.5 million — and wrote off $4.3 million from its inventory.
Chief executive George Haggar also cut EBITDA (earnings before interest, tax, depreciation and amortisation) in half.
EBITDA will now be in the order of $5.5 million to $6.5 million. The last guidance was in the realm of $10 million to $11 million.
The downgraded guidance was due to $19 million in one-off costs including the inventory write down and restructuring costs, and an anticipated goodwill impairment.
Murray River shares were down 2.6 per cent on Wednesday morning to 37c.
Customers don’t want substandard product
Mr Haggar blamed lower sales on more discerning customers in the bulk products market, and lower margins when they sell products on open markets rather than via contracts.
“Operational challenges post commissioning, equipment installation delays, and not being able to achieve our optimum productivity in Mildura and Dandenong have been further compounding our underlying performance”, he said.
“Our 2018 harvest has commenced, and our re-vamped supply chain is delivering improvement which will help ensure the sales potential from our own farmed production is maximised.
“We have a solid pipeline of export orders and continue to see positives in our shifting focus away from bulk and commodity lines and towards the convenience and snacking segments both domestically and overseas where our customer engagement is strong.”
A traumatic year
Murray River has been through a traumatic year which shows no sign yet of stopping.
In early 2017 founders Erling Sorenson and Jamie Nemtsas — who were pushed out afterwards — were forced to concede the summer harvest was significantly damaged by storms.
The two founders then used their significant shareholdings to block all but one of the resolutions put forward at the AGM last year and then a bloc associated with them called a meeting to roll the board.
Two weeks ago the group achieved its aims, installing Andrew Robert Monk as chair, Steven Si, and Keith Mentiplay.
Now a major shareholder bloc has lifted its stake in the business. It had warned in December that it would act to return the prior board to power if the founder group was successful.