Sale boosts Goodman Fielder result

01:23, Feb 13 2013

Food producer Goodman Fielder posted a 137 per cent rise in six-month net profit, thanks to gains from the sale of its Integro commercial oils business and lower restructuring costs.

The company reported a A$51 million ($63 million) net profit for the six months ended December 31.

But normalised net profit - excluding gains from business and asset sales and restructuring costs - fell 4  per cent year-on-year to A$41.2m.

Revenue slid 9 per cent to A$1.17 billion, while normalised earnings before interest and tax fell 17 per cent to A$95.3m.

Chief executive Chris Delaney said retail conditions in Australia continued to be very challenging, where lower volumes and prices, particularly in its baking division, had impacted its performance. 

Delaney said the result was in line with its expectations and showed the growing diversity of earnings in its three core markets of Australia, New Zealand and Asia Pacific.

"We have delivered improved earnings in our Asia Pacific business, while a strong increase from our dairy business resulted in earnings from our New Zealand operations being in line with the previous corresponding period."

The company has negotiated price increases for its bakery and grocery products on both sides of the Tasman, and the prices of some of its breads rose in New Zealand in December. Delaney said that would improve its second-half performance.

Goodman also reduced net debt - now 35 per cent lower year-on-year - which cut its net interest expense by 29 per cent. 

In August, the company reported a A$147m loss for the year to June 30, thanks in part to a "perfect storm" that saw volumes in its bakery division fall, commodity prices rise and retail prices plunge on competition from cheaper private labels.

Delaney said it was ahead of its target to make A$100m in annualised savings by 2015, and it had already completed phase one - achieving A$40m in annualised savings.

The savings programme involves cutting its manufacturing facilities from 53 to 35 through consolidation of sites, closures and divestments.

Goodman sold its New Zealand Champion Milling business to Japan's Nisshin Flour Milling for $51m in December.

It sold its Integro commercial oils division for A$170m in August to Australian-listed GrainCorp.

Revenue from continuing operations, excluding Integro and NZ Milling, fell 5 per cent year-on-year in the first half to A$1.08b. Normalised net profit, excluding the gains from the Integro sale and restructuring costs, from continuing operations fell 3 per cent to A$33m.

The first half result included a $10m increase in marketing and provision for staff incentives.

Shares in Goodman Fielder were up 2.25 per cent in trading on the NZX today to 91c.