Half-year results: Retail Food Group swings to net profit for first time since 2017

Homegrown franchising giant Retail Food Group has swung to a net profit for the first time since 2017.

HOMEGROWN franchising giant Retail Food Group has swung to a net profit for the first time since allegations of widespread mistreatment of franchisees emerged in 2017 and devastated its share price.

The Robina-based company this morning reported a statutory net profit for the six months to December 31 of $14.3 million compared to a $111 million loss for the previous period.

Underlying pretax earnings – which strip out one-off items – came in at $21.5 million, which was in line with FY20 guidance of between $42 million and $46 million.

Executive chairman Peter George said the company was on a sound footing due to a “sustainable debt facility, together with a liquidity buffer that provides stability whilst management implements various performance improvement initiatives”.

Retail Food Group brands include Pizza Capers.

Last year the company raised $190 million from investors while agreeing with its financiers to pay back $118.5 million, wipe off $71.8 million worth of debt and provide a new $75.5 million facility through to November, 2022 to ­refinance the remaining debt.

The deal came before a deadline for its $260 million debt pile approached.

RFG also announced earlier this year it had offloaded its loss-making Hudson Pacific business back to its original owners Frank Karkalas and Ken Skoullos.

Mr George said the deal enhanced its focus on RFG’s core retail and beverage operations and its move to cut costs.

The RFG share price plummeted following allegations of mistreatment of franchisees. Photo: iStock

“RFG’s restructuring program remains on track and targets $8 million to $9 million per annum in further cost savings with potential for further upside,” he said.

Signs of the company’s fortunes stabilising were evident from a $2.1 million increase in franchise earnings to $26.4 million, he said.

Shares in the company jumped as much as 10 per cent and were still trading 7.5 per cent higher at 10c by 10.51am.

Retail Food Group has endured a horror three years marked by huge losses and a nosediving share price amid wide-ranging reputational and regulatory issues after it was accused of badly mistreating franchisees.