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Pacific Brands delivers profitable growth
Sep '08
Reliable and innovative business delivers guidance in a challenging environment Commenting on the results Pacific Brands Chief Executive Officer Sue Morphet said “Pacific Brands delivered on its full-year growth guidance, including the first full year of acquired businesses, reaching a record $2.1billion in revenue and $229m of earnings before interest, tax and amortisation.

This performance has been achieved during currently challenging trading conditions and demonstrates the resilience of the Pacific Brands business.

Strong and reliable cash flow remained another feature of the Pacific Brands result. Net Operating Cashflow increased 39% to $157m. Net debt was reduced by 7% to $743m, with gearing of 2.9 times now back to around its level before the Yakka Group acquisition.

“Despite economic conditions, we remained focussed on core brands and delivered profitable growth.“We have successfully integrated Globe International's Streetwear division (Brand Collective) and the Yakka Group business into Pacific Brands. Both are performing to expectations.

“The entire Pacific Brands business grew sales by 16.3% in the year and EBITA by 18.1%. “Our performance has been driven by our ability to continually deliver highly desired products to our retailers and consumers.

Our ongoing product innovation and marketing capability has ensured that we continue to maintain category leadership. Category leadership means we are the anchor supplier in key categories for Australia's major retailers.

“Despite its stable of strong brands, Pacific Brands has not been completely immune to the recent downturn. We have found the top-end manchester market and women's fashion footwear to be particularly sensitive to the change in consumer sentiment.

“The strength of the Pacific Brands sourcing and distribution capability allowed us to successfully navigate changing market conditions.

Inventory turn improved and total capital employed reduced by $41m without affecting our high delivery standards and improving our return on average capital employed by 0.6 percentage points.” Ms. Morphet continued.

The Board has decided to declare a final dividend of 8.5 cents per share, providing shareholders with a full year 17.0 cents per share dividend.”

FY09 and beyond “Economic commentators generally predict flat to negative retail sales for the remainder of calendar 2008, with recovery emerging in 2009.

Consistent with our second half, we are well positioned for the down-turn delivering the staple brands of choice for customers and consumers. Our focus during this period will be on growing market share.

Based on the economic outlook, we expect FY09 like for like sales growth of 2-3% EBITA, NPAT and EPS growth of 3-5%, while maintaining strong cashflow.

We will achieve this through tight control of expenses, targeted and tailored marketing investment and ensuring an inventory balance consistent with sales.

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