Stiff competition in the supermarket frozen food aisle has eaten into Patties Foods margins and caused its first half profit to dip 16.5 per cent.
The company, which owns Herbert Adams, Four'N Twenty and Nanna's, increased its revenue by 5.1 per cent over the half but managing director Greg Bourke said growth in its petrol station and convenience store products did not offset margin pressure in its supermarket division.
"In Home (supermarket) revenue was flat and margins reduced during the period, mainly in the frozen fruit and fruit pie categories," he said.
"The commissioning of the new robotic packing equipment has been below expectations and has caused higher conversion costs and supply disruptions."
Chairman Chris Riordan said Patties Foods would continue its focus on improving its brands and finding more avenues to sell its products in order to combat challenging trading conditions.
"Our response must continue to be a relentless focus on supporting and enhancing our brands, developing new channels and regions and improving our manufacturing and supply chain efficiencies as part of an overall ongoing review of our cost structure," he said.
Patties Foods' profit for the six months to December 31 was $9.05 million, down from $10.8 million in the previous corresponding period.
The company had forecasted the profit fall at its annual general meeting in December.
Revenue for the half up 5.1 per cent to $125.47 million and the company said it had maintained its leading position in market share across all of its categories.
The frozen and convenience food company said its investment in strategic growth, which includes exporting more of its products, would continue.
It said it had already identified export opportunities in the UK, Asia and the USA and expected to start seeing the results from the strategy in the next two to three years.
Patties Foods said it would also continue to cut costs and improve its manufacturing efficiencies which included completing its robotic packing equipment by the end of the year.
"Based on current trading projections, we expect NPAT (net profit) for the second half to be at or above the NPAT (net profit) for the previous corresponding period," the company said.
The company announced that it would pay shareholders a fully franked interim dividend of 3.2 cents per share on April 12.
At 1512 Patties Foods' shares were 13.5 cents, or 7.94 per cent, lower at $1.565.