Video | Agriculture | Confidence | Economy | Energy | Employment | Finance | Media | Property | RBNZ | Science | SOEs | Tax | Technology | Telecoms | Tourism | Transport | Search

 


Goodman Fielder margins shrink, impairments lead to loss

Goodman Fielder margins shrink, impairments lead to A$405M annual loss

By Jonathan Underhill

Aug. 13 (BusinessDesk) - Goodman Fielder, the food maker under takeover offer from Wilmar International and First Pacific Co, posted a full-year loss after writing down the value of its baking and grocery businesses and recognising costs to exit businesses.

The loss was A$405 million in the 12 months ended June 30, from a profit of A$83.5 million a year earlier. Sales rose 3.4 percent to about A$2.2 billion.

The annual result shows rivalry in the grocery market and soaring costs for milk and wheat are dogging the maker of household brands such as Vogel’s bread, Meadow Fresh, Edmonds and Ernest Adams, which had hoped to be in better shape after massive impairments, restructuring and asset sales in 2011 and 2012. Instead, it has recorded a A$337.4 million pretax charge against its Australia and New Zealand baking division and a A$20.8 million impairment against NZ Grocery.

"This is a disappointing result in the context of where the company had expected to be at this point in the strategic plan," said chief executive Chris Delaney. In response, "we have accelerated cost saving initiatives across the business."

Included in the charges were the loss on sale of divested businesses of A$97.3 million, while associated restructuring and cost saving accounted for A$38.2 million.

The biggest slump in earnings came from its New Zealand dairy division, which posted a 47 percent drop in normalised earnings before interest and tax to A$19.9 million, even as sales jumped 20 percent to A$472.7 million. The Ebit margin for dairy, which includes its meats operations, shrank to 4.2 percent from 9.5 percent.

The division was "severely impacted by the record increase in the farmgate milk price during the year," it said. "Goodman Fielder was not able to fully recover this higher input cost through wholesale pricing to its customers, which had a significant effect on margins in the dairy business." The prospect of a lower milk price in the current year, would help earnings recover, it said.

The baking division recorded a 29 percent drop in normalised Ebit to A$35 million as sales rose 3 percent to A$925 million, which the company attributed to rising transport costs and a higher price for wheat. The baking Ebit margin shrank to 3.8 percent from 5.5 percent.

Normalised Ebit for the grocery division fell 20 percent to A$50.9 million on an 11 percent decline in sales to A$448.9 million. The grocery Ebit margin slipped to 11.3 percent from 12.6 percent.

"Our grocery business continued to face a very challenging retail trading environment, which was compounded by our new product development in spreads not being successfully ranged across all retailers," Delaney said.

The company's Asia Pacific division, which includes a poultry business in Fiji and food ingredients in Papua New Guinea, was a bright spot, posting a 15 percent gain in earnings to A$65 million as sales climbed 7 percent to A$354 million. Its Ebit margin widened to 18.4 percent from 17 percent.

Delaney said he expects 2015 "to be another difficult year" as "we continue to refine our strategy and re-align the cost base to deal with these challenges to build our competitive position. We remain committed to building a business which can deliver sustainable growth over the medium term."

Goodman Fielder will pay a final dividend of 1 Australian cent a share on Oct. 1, with a record date of Sept. 15, bringing payments for the year to 2 cents.

The shares fell 0.8 percent to 63.5 Australian cents on the ASX, below the 67.5 cents a share offer made by Singapore-based Wilmar and Hong Kong-listed investment firm First Pacific. The proposal includes a 1 cent dividend.

(BusinessDesk)

© Scoop Media

 
 
 
 
 
Business Headlines | Sci-Tech Headlines

 

Employment: ANZ Proposes Casualisation In Whangarei Stores

ANZ workers in Whangarei could see their incomes drop by 20 to 40 percent if the bank’s proposal to reduce the number of full-time positions goes ahead says FIRST Union national organiser Tali Williams. More>>

Finance: BNZ Develops Specialist Tāmaki Māori Banking Team

BNZ develops specialist Tāmaki Māori Banking Team to support Māori as Auckland grows More>>

Pharmaceuticals: Commerce Commission To Consider Pharmaceuticals Merger

The Commerce Commission has received an application from Pfizer Inc. seeking clearance to acquire all of the shares in Hospira Inc. More>>

Real Estate: Housing Unaffordability Issues Spread

Surging house prices in Auckland and Queenstown last month pushed home ownership even further beyond the reach of first home buyers in the two districts, according to the AMP360 Home Loan Affordability Report for March. More>>

Statistics NZ: Annual Exports To China Dip Below Australia

The value of goods exports to Australia ($8.7 billion) surpassed those to China for the year ended March 2015, Statistics New Zealand said today. More>>

Science: Hookworm Discovery At Malaghan Institute

Professor Graham Le Gros has led a team which has stimulated both innate and memory responses to the parasite, discovering along the way the unexpected behaviour of one particular immune cell, in Hookworm, one of the world’s most devastating tropical ... More>>

Business: Provinces Urged To Make Full Use Of New Air Services

Provincial New Zealand has been urged to use new air services to Auckland or risk losing them either partially or completely. The stark warning was issued today by Far North mayor John Carter at a ceremony at Kaitaia airport to mark the final Air ... More>>

Mobile: 2degrees To Credit All Calls And SMS To Nepal

In the wake of the devastating earthquake in Nepal in the weekend, 2degrees will be crediting all calls and SMS messages made to mobiles and landlines in Nepal from Friday 24th April until midnight Wednesday 29th April. More>>

Scoop Business: Alex Swney Pleads Guilty To $2.5M Fraud Charge

Alex Swney, former chief executive of the Auckland city centre business association Heart of the City, has pleaded guilty to dishonestly using documents to obtain $2.5 million. More>>

ALSO:

Petrol Burns Prices: Second Consecutive Quarterly Fall For CPI

The consumers price index (CPI) fell 0.3 percent in the March 2015 quarter, following a 0.2 percent fall in the December 2014 quarter, Statistics New Zealand said today. The last time the CPI showed two consecutive quarterly falls was in the December 1998 and March 1999 quarters. More>>

ALSO:

Get More From Scoop

 
 
 
 
 
 
 
 
 
Business
Search Scoop  
 
 
Powered by Vodafone
NZ independent news