Burns Philp have come back from the dead under CEO Tom Degnan but it has got plenty of work to do to return to the glory days, as Neal Woolrich reports from this year’s AGM.

Chairman Alan McGregor gave a brief address before throwing to CEO Tom Degnan. Degnan pointed to the fact that the company’s core yeast business should not be adversely affected by the events of September 11 and highlighted various cost cutting and re-pricing initiatives during the year which point to improved profitability in years to come. Interestingly, he thought growth prospects in the Asia-Pacific region were strong due to increasing populations and the “Westernisation” of eating habits.

The 2002 first quarter figures showed profit after tax up 19% on a 7% sales increase.

But the rosy picture that was painted at today’s AGM came off a very low base as pointed out by Crikey’s most prolific contributor of the past week (indirectly at least), Mr Jack Tilburn.

Chairman Alan McGregor pointed out some of the cost-cutting initiatives that had been implemented by the company their Sydney office’s numbers were cut from 85 to 21, 350 positions were eliminated due to the closure of their US offices and 20 loss-making business were disposed of.

The ASA representative, Mr Ray Wagner, had several questions, first wondering when shareholders could expect an improvement in the company’s EPS and payment of a dividend. McGregor indicated that EPS would take a while to improve due to the recapitalisation and that in the past EPS had been artificially high because the company was severely under-capitalised. You’d hate to see what the EPS was back in the dark old days of a year ago if the company was adequately capitalised! McGregor indicated that dividend policy was constantly reviewed but was dictated by the funds that the company had available and whether they would be best employed in paying dividends, securing the company’s Balance Sheet or investing in opportunities for expansion. He hinted that expansion opportunities were looking good so the message to take from that is that shareholders shouldn’t be holding their breath for a dividend.

After a few more questions from Mr Wagner on whether the Chairman thought their profitability forecasts were realistic and what return on shareholders’ funds the company was aiming for, it was over to our old mate Crazy Jack.

The Chairman noted that he was “looking dapper in his bow tie” to which CJ responded that he was “taking after my friend James Strong”. The analogy-happy Tilburn opined that “the company has very modestly gone ahead during the year. It is like sitting the HSC and getting a 58 in Music or Art, or perhaps in a more challenging subject like Economics, compared with 50 last year”. With all due respect to Jack’s mathematical ability, their 8% profit improvement is probably more like getting 54% opposed to 50% last year.

Jack continued and said “I’m very worried. I have several questions as always, and if the people don’t mind, I’ll go right ahead I’m full of energy today”.

Jack’s first gripe was that the proxy forms were confusing and not at all user friendly. He indicated to the meeting that he’d shown the Woolworth’s proxy form to Burns Philp’s company secretary and hoped that next year the proxy form could be more user-friendly. Why a bloke who attends more AGMs than Stephen Mayne would be concerned about the proxy form is beyond me, and the Chairman hoped that “the rest of your questions have more substance than that”.

They didn’t, to the surprise of no-one.

Jack was at his entertaining best, but for a company that has performed so poorly in recent years, he really didn’t crank up for this AGM. In fact, Jack didn’t really nail the company at all on its financial performance. His best contributions were “I hope the company can allocate some funds for some nice cold orange juice at the so-called ‘refreshments’ outside” and “I note from Mr Thomas J Degnan’s speech that he is American. Perhaps he could engage in the good old Australian tradition of a sample bag of herbs and spices for shareholders”.

Jack rightly queried Degnan’s $3.5 million package which seems pretty high for a company with turnover of $1.4 billion and also questioned why there weren’t prior year comparables in the Directors’ Remuneration Note. Chairman McGregor thought that Jack would have that at his fingertips in his extensive database, to which Jack replied “in my 30 companies I think I’m working harder than you”. No-one would doubt that!

In what seasoned observers think is a first, CJ gave “some applause” to the authorities for reigning in Auditors’ fees and complimented the company on the helpful footnotes which explained the Auditors’ fees in “the Bible”. This earned the company a “very good piece of credit” from CJ.

In other breaking news today, the sun rose in the west.

The ASA’s Mr Wagner again took the floor and congratulated CEO Degnan on the “sterling job” he has done over the past five years and encouraged the crowd to join him in a round of applause which they did without hesitation. He opined that Degnan’s appointment was the smartest move the company had made.

Probably not that outrageous a statement the company has gone from an $873 million loss in 1997 just prior to Degnan’s arrival, to a $285 million loss in 1998 and small profits in the last 3 years. But the company still isn’t out of the woods and the real challenge will be to turn it into a highly profitable concern. Degnan has shown acute skill as a cost slasher but his real challenge will be a return to the company’s glory days and a few dividends to placate the likes of the Corporate Terminator, Jack Tilburn.

If he manages that, he is a miracle-worker.

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