TFS Corp optimistic despite profit slump

Agribusiness TFS Corporation remains optimistic about its business despite the loss of confidence in the managed investment scheme market, as it today reported a slump in first half net profit.

The Nedlands-based company posted a $983,000 million net profit from ordinary activities for the first half of 2009/10, down from $8.5 million in the previous corresponding period.

The profit was impacted by the exchange rate on the non-cash component of revenue which record the current value of TFS' sandalwood plantations in US dollars.

However, TFS said the reduction in non-cash revenue was offset to some degree by a rise in the recognition of deferred fee to $7.5 million, up 44 per cent.

Total revenue from ordinary activities fell 23.7 per cent from $29.3 million to $22.36 million.

Excluding non-cash items, TFS reported a cash net loss of $4.4 million, up from the previous corresponding period's net loss of $2.6 million.

"As TFS results are typically skewed to the second half, the 1H10 result is not indicative of the potential full year outcome," TFS said in a statement.

"The loss for the half reflected the off-season period for MIS sales, where only 12.2ha of Retail MIS product was sold in the period, and TFS' wholesale product sales are not expected until 2H10.

"The result also included the operations of MRA (Mt Romance Australia), which are also skewed to the June half."

The Mount Romance Australia division generated earnings before interest, tax, depreciation and amortisation of $1.2 million for the half-year, down from $2.1 million.

TFS said the result reflects the continuing challenges for the European perfume industry due to the global financial crisis.

"The downturn has acted as a catalyst for the perfume industry to force manufacturers to hold more stock for longer, and made sales more volatile on a monthly basis," the company said.

Further, competitiveness is being impacted by the significant exchange rate appreciation over calendar 2009. European markets are recovering slowly with inventories gradually being run down.

"On a more positive note, recent sales to China and India from Spicatum oil and bi-products have been strong, leading to expectations that divisional earnings should grow on a like for like basis in FY10 by at least 10 per cent."

Shares in TFS dropped 8.5 cents to 90.5c at 13:58 AEDT.