Not encouraging first half, with only 1.6 mil EBIT but still...

Not encouraging first half, with only 1.6 mil EBIT but still promising big second half. Div down to 2c.

Not sure about their reliability - market sell off, they have disappointed in the past, but now looking cheap. Thoughts ?

"OPERATING PERFORMANCE UPDATE
Frigrite Limited, a market leader in the field of climate control solutions (refrigeration and air
conditioning) for both the food and beverage market and the wider community, wishes to
provide guidance to the market on the forthcoming interim results for the six months ended
31 December 2006, and to reaffirm previously stated guidance for the FY07 full year EBIT
outcome.
Based on preliminary figures, Frigrite anticipates that its interim EBIT result will be in the
order of $1.6m, compared to $5.8m in the previous corresponding half. This anticipated
result is in line with the company’s expectations and reflects the following factors:
· lower factory volumes as a result of reduced order intake from our major customer, as
highlighted at the company’s Annual General Meeting (AGM) in November. In light of
this lower demand, Frigrite took the opportunity to bring forward to September the twoweek
shutdown normally taken in January;
· a solid underlying performance from the installation and service division, augmented by
the contribution from the NAC Air Conditioning business acquired in February 2006; and
· due diligence costs of $0.5m associated with a significant unsuccessful acquisition
opportunity.
It remains Frigrite’s expectation that the FY07 full year EBIT result will fall in the range of
$7.3m to $7.8m, compared to the $8.3m achieved in FY06. This projection is based on:
· indicated demand from Coles Supermarkets for new refrigeration cases, which is
expected to progressively increase across the remainder of the financial year, and
follows the successful conclusion of a new refrigeration case supply agreement with this
key customer for a two-year period commencing 1 December 2006;
· continuing solid performance of the installation and service division which now accounts
for the majority of contribution to earnings at Frigrite; and
· the impact of the “one-off” expenses associated with the unsuccessful acquisition
opportunity.
Based on the anticipated full year result, it remains the Board’s current intention to pay an
annual dividend for FY07 similar to the 7.7¢ per share fully franked paid in respect of FY06.
Given the reduced proportion of earnings expected to arise in the first half, however, the
Board has determined that an appropriate level for the FY07 interim dividend is 2.0¢ per
share fully franked, compared to the FY06 interim payment of 4.2¢ per share fully franked.
“Whilst the first half result will be well below that of the corresponding period in FY06, it
accords with the expectations held at the time of our AGM in November and reflects the
significant impact that lower throughput has on our factory productivity,” said Mr John Carew,
Frigrite’s Managing Director. “Encouragingly, factory volumes have picked up in the second
and third quarters, and are expected to rise further in the final quarter following the recent
finalisation of our agreement with Coles which sees our status as their preferred supplier