The Jardine Group's food retailing arm, Dairy Farm International Holdings, suffered a 34.5 per cent slump in profit after tax and minorities to US$148.8 million last year. The company yesterday blamed the fall mainly on problems at its Australian supermarket unit Franklins. Dairy Farm, which owns Wellcome supermarkets and Oliver's and Maxim's stores in Hong Kong, took an exceptional $35.7 million after-tax hit stemming from three years of computer processing errors which ruined its stock control. It also revealed a collapse in Australian trading profit to $32.7 million from $60.5 million. Overall trading profit fell 9 per cent to $244.4 million. After accounting for the exceptional charge and an exceptional property gain in 1994, earnings per share plunged 37 per cent to 7.86 cents. Stripping out exceptionals, the earnings fall was only 6 per cent. The final dividend is 4.35 cents a share, taking the annual payout to an unchanged 6 cents. 'The Australian business is our single biggest problem,' managing director Graeme Seabrook said. 'It's holding back the rest of our group.' Australia, however, is not the only problem. 'Dairy Farm is facing intense competition in its more mature markets,' chairman Simon Keswick said. 'Investment in new markets and development costs incurred in response to a changing retail environment will also hold back the current year's trading profit,' he said. ING Barings analyst Petrina Wilkins saw few grounds for optimism and is maintaining her sell recommendation. 'All their mature markets - Australia, Britain and Taiwan - are facing tough competition,' she said. 'At the moment, we don't have a clear indication that they will be able to successfully compete.' Elsewhere, trading losses in Europe rose from $6.1 million to $15.5 million after property revaluations at Simago stores in Spain lopped $8 million off their asset value. Mr Seabrook said Simago's trading performance was at last improving. Discount food retailer Kwik Save, in which Dairy Farm has a 29.4 per cent stake, was also suffering from a vicious supermarket price war in Britain. Mr Seabrook saw no immediate end to it. 'We always believe in going eyeball to eyeball,' he said. 'We don't start price wars but we don't finish them either.'