Thursday, November 30, 2023

Meal-kit company feels heat at AGM

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My Food Bag shareholders give board a mild roasting over profits.
My Food Bag’s share price has been belted in recent times, falling more than 70% in the past 12 months.
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“WHEN I open the box, I want to see what Nadia is eating, not a spring onion and tomato that looks like it was sitting in the chiller at the local dairy for a week.”

That’s a comment a shareholder made to the My Food Bag board at its annual meeting on Thursday, a fatigued affair that saw a mixed bag of comments being fired off by shareholders who ranged from resigned to peevish.

The most common criticism heard was the company’s ever-sinking share price – and what the board is doing to address it.

My Food Bag’s chair, Tony Carter, described the share price concerns as “very fair”.

“The board is obviously concerned about the share price,” he said. “It’s something that we are not pleased with.”

But Carter was quick to say that it is the market that sets the share price – the business doesn’t control it.

“What we can control and influence is the performance of the business.”

One shareholder – who didn’t reveal his name and left the meeting before BusinessDesk could track him down – made all three of the directors up for re-election and election sweat just a little under the collar.

He wanted to know what My Food Bag independent non-executive director Sarah Hindle wants to complete in the next two years. Hindle, after a pause, replied that she wants to see the share of My Food Bag’s customer base grow.

The shareholder also asked The Warehouse’s ex-chief executive, Mark Powell, who was up for election, what was the most difficult decision he’d made at My Food Bag since being elected last year.

Powell didn’t answer the question directly, instead expanding vaguely that getting the cost base right for customers while caring about the people is difficult.

“It’s a hard decision because it involves people, and any good business starts with customers, delivers to people and understands that’s what drives profitable growth for shareholders in the long term,” he said.

The same shareholder also asked Jennifer Bunbury, also an independent non-executive director, what unique quality she brings to the board that it didn’t already have.

“She lives in central Otago,” another shareholder in the audience suggested, to giggles from around the room.

But Bunbury told the room that her point of difference is having strong capital market experience.

The shareholder appeared to have been pleased with the answers because, at the end of the meeting, he told the board he’d bought about 750,000 shares when the company listed and had come to Thursday’s meeting prepared to sell – but had now changed his mind.

“Please continue focusing on making money,” he said.

The board were also questioned on how removing GST on fruit and vegetables would impact the business if Labour gets re-elected.

“It’s too early to say,” Carter replied. “That’s the short answer. It’s going to be very complex, and we will wait and see.”

Carter pushed back against a shareholder question about what cost-cutting measures are occurring and if director fees and salaries are taking a cut.

“We have to reward the people for what they do. And just because the business is not trading as well as perhaps some people might have expected, I think we’ve got a lot of respect,” he said.

“If you’re still profitable, it’s not a business that’s losing money. But if you cut executive salaries, you would lose people, and you just get into a vicious cycle. 

“It’s the wrong thing to do.”

Chief executive Mark Winter said after the meeting that he has been “very pleased” with the company’s direction since he stepped into the CEO role last November, but isn’t content “by any stretch of the imagination”.

‘“There’s a lot more to do. The second you’re content, you’re actually going backward.

“I’m very determined to get on with it,” he said.

Winter had no regrets about delisting from the Australian securities exchange (ASX) in June.

My Food Bag was dual-listed on both the NZ and Australian stock exchanges at $1.74 in March 2021. 

“It doesn’t prohibit, of course, Australian investors from investing in My Food Bag because they can certainly invest directly through the primary on the NZX,” Winter said. “There’s more liquidity. So in that regard, it all makes sense.”

In May, My Food Bag said it was cutting the number of people across its non-operational team by 10% – but Winter said after the meeting that no more job cuts are on the horizon for the rest of the year.

That doesn’t mean job cuts are officially off the kitchen table, though.

“Every role that comes up, we’re continuing to pressure test and challenge whether or not we need to replace that role or whether or not we can adopt technology or whether we can consolidate roles and so forth,” Winter said.

Winter has been at My Food Bag since early 2019 – spending over three and a half years as the company’s chief financial officer before officially picking up the CEO reins last November. 

The firm’s full-year net profit after tax (NPAT) was just $7.9 million – a stark drop from its $20m in NPAT a year ago.  Earnings before interest, taxes, depreciation and amortisation (Ebitda) fell from $34m in 2022 to $18.m – a 46.4% dive.

Revenue also edged down from $194m to $175.7m – a less dramatic 9.4% fall but an indication that costs have been hitting the bottom line.

The meal-kit company’s share price has been belted in recent times, falling more than 70% in the past 12 months.

In mid-afternoon trading on Thursday, My Food Bag’s shares were flat at 19.5 cents per share on light trading.

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