Goodman Fielder shock 17.3% profit drop – Strategy review to follow

Posted by AFN Staff Writers on 29th August 2011

Australasia’s largest food manufacturer, Goodman Fielder, has announced a full year Net Profit After Tax of A$133.3 million for the year ended 30 June 2011, down 17.3 % from A$161.1 million for the previous corresponding period.

Goodman Fielder’s bread brands include Country Life Bakery, Flinders Bread, Freya’s, Helga’s, Lawson’s, Mackenzie, Leaning Tower, Mighty Soft, Wonder White, Vogel’s, and Quality Bakers. Its dairy brands include Activate, Bouton d’or, Chesdale, Meadow Fresh, Naturalea, Ornelle, Puhoi Valley, and Tararua. The company published its full year results today.

Goodman Fielder saw a significant drop in profits in the second half of the 2010/11 year. It attributed this to “declines in the baking and dairy businesses”.

Goodman Fielder’s end-of-year report states, “Economic conditions in Australia and New Zealand were challenging in the second half and this resulted in weakened consumer confidence which impacted retail buying trends as consumers pursued cheaper alternatives.

“The company’s baking business suffered a significant loss of profitability during the second half of the year due to several factors including volume reduction, less favourable product mix, high commodity costs, and inadequate cost recovery. The baking business incurred significant volume reduction following the loss of a private label contract in Australia and the business did not reduce manufacturing and logistics overheads quickly enough to compensate.”

As a result of weak trading in the baking division during the second half of the year, the company announced on 19 August a non-cash impairment charge of A$300 million (A$250 million in Australia and A$50 million in New Zealand).

Goodman Fielder has refused to offer an outlook on 2011/12 performance until a “review of the company’s strategy” has been undertaken by newly appointed chief executive Chris Delaney. An update will be given at the company’s Annual General Meeting on 24 November 2011.