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Patties Foods Limited earnings smashed by Hepatitis A scare

A much publicised Hepatitis A scare took its toll on Patties Foods Limited (ASX: PFL), which reported a massive 87% dip in net profit for the year ended 30 June 2015.

So What: Patties Foods’ earnings results were weighed down by a minor outbreak of Hepatitis A in Australia, and publicity around the unfounded scare had a negative impact on sales. Meanwhile, a rise in beef prices also impacted its meat pies products and hurt overall operating margins.

Net sales revenue rose just 3.7% year-on-year while the group’s net profit fell to just $2.1 million, compared to the $16.7 million reported in the 2014 financial year. When one-off items such as costs related to the frozen berries recall and a $12.6 million impairment on the Frozen Fruit business were excluded however, the group’s underlying net profit was $15.4 million – down a more respectable 7.8% on the prior year.

The company’s CEO, Mr Steven Chaur, said: “Despite these pressures, the company has proactively worked to help mitigate any long-term effects and focus on driving its core savoury business, which continues to perform solidly and has gained profitable market share in all key sales channels.”

Although Patties Foods is home to some well-known brands, it’s not exactly the kind of company that seems likely to set the world on fire, either. With the stock market hovering near a two-year low, investors could likely do better by looking elsewhere.

The smart money is looking for up-and-coming smaller companies with huge potential.

Two of Australia’s most promising small companies are still flying under the radar. Discover these two exciting ASX investments in our brand-new special FREE report, “2 Small Cap Superstars”. Click here now, it’s free!

Motley Fool contributor Ryan Newman has no position in any stocks mentioned. You can follow Ryan on Twitter @ASXvalueinvest.

The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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