Goodman Fielder on track: Ould

Posted by Daniel Palmer on 21st September 2009

Goodman Fielder Chairman Max Ould has informed shareholders that the company remains set on a growth path despite facing significant headwinds in recent years.

Mr Ould said private label, credit markets and commodity costs had caused concern for the largest publicly-listed food manufacturer in Australia but he was confident they would grow profits in the years ahead.

“We have had to deal with very high commodity costs over the last couple of years which have added over $350 million to our cost base,” he advised in a letter sent out today to shareholders. “As well the global financial crisis has reduced consumer confidence which has put a lot of retail businesses, including Goodman Fielder, under some pressure. Consumers have tended to drift towards lower priced products such as private label brands.”

“Despite these issues we have increased our revenue, earnings and net profit. Our earnings per share moved from two cents to slightly over 13 cents per share. Of course, last year we did have some one-off non-cash charges in terms of the carrying value of our New Zealand business, but it is still a very creditable performance.”

Mr Ould added that the company had heightened their focus on debt reduction in the wake of credit market upheaval.

Strategy

Goodman Fielder has already announced the outcome of a strategic review, which is likely to see the divestment of their commercial oils business as they concentrate on their portfolio of branded everyday foods. Mr Ould advised that the sale process of the commercial oils business was ongoing.

The letter also explained to shareholders that organic growth would be pursued rather than “just go(ing) out and buy(ing) other companies”.
Outlook

“We see the outlook for the remainder of this financial year as encouraging,” Mr Ould said. “We expect to see some efficiency gains resulting from the investments that we’ve made over the last couple of years and from our plant rationalisation program. Our new strategic focus and the strength of the brands will underpin our growth and we will
also benefit from improving commodity costs.”