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Published:  23 July, 2008

After nearly two years of negative press, Australian giant Southcorp finally had some good news to report as it posted a massive rise in profits for the 2003/2004 financial year, and saw its biggest single-day share price rise for two years. The company reported profits after tax and before significant items of AUS $108.9 million (42.9 million) for the year ended 30 June 2004, up 170% from 2003. The company's earnings before interest, tax, amortisation and significant items were AUS$176.3 million (69.6 million), up nearly 50% from 2003. The announcement triggered a rise in the company's share price of 6.2% to $3.24. Southcorp managing director and chief executive officer, John Ballard, said the improvement in fortunes was largely down to the cost-cutting measures he has put in place since taking over the business last May. Through the success of the Veraison disciplines we introduced this year, Southcorp has delivered a substantially better profit performance, despite an adverse profit impact of approximately $19 million from the strong Australian dollar,' Ballard said. We reduced costs by $40 million per annum and developed a new blueprint for our production and distribution operations which, through savings in fixed and freight costs, will deliver incremental earnings of $27 million per annum by 2008. The introduction of stronger financial discipline enabled us to reduce debt by AUS $169.1 million and lift our return on capital employed to 9.3% up from 5.9% in 2003. While there is still more progress to be made, these improvements signal a much healthier and stronger Southcorp,' Ballard added. Of UK/Europe, Ballard said: The region delivered a commendable turnaround in 2004, returning to profit in the first half of the year, well ahead of expectation. Not only did we move away from deep discounting in the UK market, which had the effect of improving our case rates by 12.9% for the year, but we also grew the company's European business. In 2005, we will continue to invest in our brands in the UK with campaigns such as the Lindemans "L" advertising and promotional programme. We'll also be extending the Lindemans campaign to Europe as well as launching a TV advertising campaign for Rosemount Estate in Ireland and taking advantage of advertising de-regulation within the Nordic countries to run print campaigns on the key brands.'