Veritas shares drop after lower guidance confirmed

Veritas Investments says it's on track to achieve its 2017 guidance after its first quarter of trading, with revenue expected to be lower than in 2016.

The company remains on track for revenue forecast between $50-55 million for the year ended June 2017, compared with $56.5 million a year earlier, and underlying net profit after tax in the range of $3-3.6 million. Its underlying net profit from continuing operations was $3.16 million in 2016.

When it first gave the guidance in September, Veritas said it expected its Nosh Food Market unit would deliver between $22-23 million in revenue, compared with $22.5 million in 2016. Sales at its Mad Butcher stores would fall to between $7-8 million, from 2016's $9.8 million, and The Better Bar Company would have sales of $21-24 million, down from $24.1 million.

Veritas said that operational changes and a profit improvement programme, which Nosh has implemented are helping reduce ongoing operating losses in that segment, and it expects further improvement over the Christmas period.

"Trading remains competitive with a number of stores experiencing aggressive supermarket competition," Veritas said in regards to Mad Butcher.

"The company is entering what is traditionally its strongest trading period, being Christmas and summer. It has implemented a number of marketing and cost control initiatives that have resulted in a slight improvement in underlying profitability despite the trading conditions, compared to the previous year to date."

The Better Bar Company exceeded its earnings before interest, taxation, depreciation and amortization budget in the first quarter, and showed an improvement on last year's result for the same period, the company said.

"Ongoing improvements are planned for several of the outlets to enhance the customer experience. Trading is expected to be strong over the next quarter."

Its wind-down of Kiwi Pacific Foods is on target and is largely complete and due to be finalised by March 31 next year.

In August, Veritas reported a full-year loss of $4.6 million compared with a profit of $3.3 million in 2015.

Notes to those accounts showed it had current liabilities of $21.4 million and assets of $6.8 million. It has $16.5 million of debt falling due within the next year, and a further $16.7 million due beyond that. Debt of $3.3 million is due for repayment on a month by month basis to September 2019.

The shares last traded at 20c, down 13% and have fallen 52% this year, having dropped sharply after the 2016 earnings were announced.

(BusinessDesk)