East coast lures D’Orsogna

Family-owned smallgoods manufacturer D’Orsogna Ltd is targeting national growth after reporting a solid increase in annual sales and profit.

The company lifted sales by 11.5 per cent to $89 million for the year to June 2007.

The higher sales, and a restructuring of its balance sheet, enabled the group to lift net profit to $2.5 million, up from just $10,795 in the previous year.

The 2007 results followed a demerger of the operating company D’Orsogna Ltd from the family company D’Orsogna Bros Pty Ltd on July 1 2006.

The demerger included converting $5 million of long-term debt owed to the family company to equity and the transfer of royalties to the operating business.

The aim of the demerger was to create a less cumbersome ownership structure and an entity that was focused solely on the core business of manufacturing and distribution of processed meat products.

Managing director Brad Thomason said the commercial benefits of the demerger included an improved ability to pursue growth.

Mr Thomason said the group was working to identify expansion opportunities on the east coast.

“We need to be seen as being a national player and to do that we need to have a presence on the east coast,” he told WA Business News.

The company has been working with management consulting firm GEM Consulting to refine its strategic plan and is “well down that path”.

Mr Thomason said options for the group on the east coast included making an acquisition, establishing a joint venture or building a stand-alone processing operation with a slicing plant, cool room and warehouse.

“There are a number of targets we are talking to. We are aiming to do something in the next 12 months,” he said.

Mr Thomason said GEM had helped the group define its options.

“They pushed us along that path faster.”

He added that D’Orsogna chair Tracey Horton, who previously worked at GEM and is currently dean of the University of WA Business School, had also brought a greater focus on strategic growth.

Mr Thomason said the group’s main focus was on being a quality supplier, which would help it achieve good trading margins, rather than trying to be one of the biggest national suppliers.

“People do give us recognition for the quality of our product. That is why we are confident we will be able to grow on the east coast,” he said.

D’Orsogna supplies its products to all of the major retail groups and the food service industry.

Its main competitor in its home state is George Weston Foods, which owns Watsonia and in 2005 bought the Adelphi and Globe Smallgoods.

One of the biggest challenges facing the group, which has 350 employees, is high staff turnover.

Mr Thomason said turnover among unskilled labour was in the “high 30 per cent”.

It has also had to contend with higher pig meat costs, as a result of the drought, rising feed costs and suppliers exiting the industry.