Goodman Fielder expects turnaround

LAURA WALTERS
Last updated 05:00 13/02/2014

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Food giant Goodman Fielder could increase prices of its dairy products as the company works to offset the costs associated with high commodity prices, an analyst says.

The dual NZX and ASX-listed company reported a plunge in profit to report a net loss of A$64.8 million (NZ$70.4m) for the six months to December 31.

The loss was largely because of the costs of selling some of its subsidiaries in an effort to focus on its core businesses.

However, operating revenue increased by 4.8 per cent to A$1.1 billion while operating costs rose to A$1.2b from A$1b during the previous corresponding period.

New Zealand shareholders would receive a non-imputed interim dividend of 1 cent a share, to be paid on April 10.

Chief executive Chris Delaney said that while the near-term outlook remained challenging, Goodman Fielder expected profits in the second half of the year to increase significantly.

However, the impact of another increase in the farmgate milk price in the first quarter, continuing high wheat prices and a challenging trading environment meant the company expected the full-year profit before interest and tax to be "broadly" in line with the A$185.6m reported last year.

Goodman Fielder said the net loss reflected the impact of impairment and restructuring costs associated with its business sales.

Last month the company announced it was selling its New Zealand meat business to Hellers, and its pizza business to Mommas frozen products for up to NZ$17m.

In December it sold its biscuit business in Australia, and in November it issued an earnings downgrade for its New Zealand dairy business. And in February last year it sold its New Zealand milling business for NZ$55m.

Short-term profit had also been affected by "sharply increased" commodity and logistics costs.

Goodman Fielder planned to grow its New Zealand dairy business across the region to enhance shareholder value, he said.

The company's shares closed on 69c, down 2c.

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