THE maker of the Chiko roll and big food brands such as Birds Eye, Edgell, John West, Lean Cuisine and Leggo's has tripled its annual profit to $91 million, thanks to heavy cost-cutting and the sharp slide in the Australian dollar.
Simplot Australia, one of the biggest suppliers to supermarket chains Coles, Woolworths and IGA, is owned by United States food giant J.R. Simplot, which entered the Australian market 20 years ago.
The latest set of financial accounts filed with the Australian corporate regulator show that sales increased 4.3 per cent to $1.29 billion for the 12 months ended August 29, 2015. Net profit after tax reached $91.1 million, up from $33.2 million a year earlier.
Simplot Australia managing director Terry O'Brien said the company achieved solid growth in several of its main categories, but the strongest performers were frozen vegetable brands Birds Eye and Edgell, along with canned fish brand John West. The company also produces the I&J frozen seafood brand, Ally salmon products and Seakist canned tuna.
Simplot also has private-label contracts for frozen vegetables with Coles and Woolworths and this line of business was crucial to keeping the Australian factories operating through difficult times 2½ years ago, when the parent company considered a potential closure and a shift of the operations to New Zealand.
Mr O'Brien said conditions were still highly competitive in the industry, and for the first few months of trading in the new financial year the company was running solidly.
"There's a hell of a lot of competition out there," he told Fairfax Media.
Simplot Australia operates factories in Tasmania, NSW and Victoria and Mr O'Brien said he was continuing to watch costs closely.
The company trimmed about a dozen jobs from an Ulverstone plant in Tasmania in October 2015. But the big cost-cutting came in late 2013, when it cut about 200 jobs at its plants in Bathurst, NSW and Devonport, Tasmania.
It contemplated a shift of some manufacturing operations to New Zealand at the time, in a similar move to rivals Heinz and McCain, but decided against it. Redundancy costs dropped in the latest financial year to $6.85 million, from $22.8 million in the previous year, when the main restructuring moves happened.
The company also benefited from a big kick to profit from foreign exchange benefits through hedging arrangements and translation impacts, and this is unlikely to be repeated this financial year.
Simplot Australia had a $36 million "positive swing" in unrealised foreign exchange gains, largely caused by the drop of the Australian dollar against the US dollar over the 12 months. Unlike many foreign-owned companies, Simplot is paying significant tax in Australia.
Simplot Australia paid $34.9 million in tax in its financial year ended August 29, 2015, up from $9.62 million the previous year.
A report from the Australian Taxation Office published in mid-December 2015 suggested that one in three big public companies and multinationals in Australia weren't paying any tax.
Mr O'Brien said Simplot Australia had about 60 per cent of the frozen vegetable market in Australia, while the John West brand continued to make solid gains and had experienced rising sales volume.
Parent company J.R. Simplot is based in Boise, Idaho, and was founded in 1929 by Jack Simplot, who died in 2008 at the age of 99.
It started as a one-man farming operation but took off in the 1940s, after he became the first person to successfully produce frozen french fries on a commercial basis.
