Food group, Goodman Fielder says the outlook for 2010 is encouraging after producing a solid improvement in earnings for the year to June.
"The company expects to see efficiency gains resulting from its capital expenditure program and plant rationalisations begin to flow through, underpinned by its strengthened focus on branded everyday foods.
"The company will continue to focus on maximising operating cash flow to ensure that it remains in a position to maintain its high dividend payout ratio and to reinvest in the business," the company said about the coming year.
The company said yesterday that net profit for the year ended June 30 was $177.1 million up from $27.7 million in the prior corresponding period, helped by significant items.
Revenue rose 6.5% over the prior financial year to $2.848 billion, but earnings before interest, tax, depreciation and amortisation also rose, 1.2%, to $375.0 million.
"Goodman Fielder Limited has achieved a solid result for FY09, with increased revenue and net profit and record operating cash flow.
"This was achieved despite depressed consumer confidence and continuing all–time high commodity costs throughout most of the period," the company said in yesterday’s statement.
The shares rose 7c or 5% to $1.465 as investors were encouraged by the outlook.
That was despite trimming the final dividend from 7.5 cents to 6 cents a share.
That took the full year dividend to 10.5 cents a share, representing a dividend payout ratio of 79.6%. It’s down from the 13.5 cents a share paid for 2008 (when earnings took a hit from one off items, as did cash).
Goodman Fielder said its Home Ingredients division posted a 25% increase in sales revenue, driven primarily by the company’s entry into the biscuit market.
The Asia/Pacific business has experienced strong growth during the 2008-09 financial year with a 33% increase in EBITDA.
In New Zealand, the company’s Fresh Dairy and Meats business performed creditably with an increase in EBITDA for the year to $43.6 million despite a difficult first half with record high raw milk costs.
The company said its Commercial edible fats and oils business, which it is considering divesting, experienced soft market conditions with a resulting loss of sales volume.
"The company has successfully weathered the effects of the last three years of record high agricultural commodity pricing. Input costs are now reducing and the company was able to improve gross margins in the second half and exit the year in a strong position.
"Significant items in the result include the profit on sale of two small noncore brands in New Zealand and profit from the sale of several manufacturing sites under our sale and lease-back program, offset by some restructuring costs. The net benefit to the company was $10.6 million (pre-tax).
"The ability to generate strong cash flow is an inherent feature of Goodman Fielder’s business model and supports the company’s high dividend payout ratio. Operating cash flow rose by 35.4% or $74.5 million to a record $285.1 million this year.
"The company has maintained its focus on debtor and inventory management and overall working capital minimisation, resulting in a cash realisation ratio of 120%, up from 84% in the prior year.
"Working capital has reduced by 23.8% over the period from $209.7 million at 30 June 2008 to $159.7 million at 30 June 2009.
"The company continues to maintain a conservative balance sheet with net debt reducing to $999 million as at 30 June and a gearing ratio (net debt to EBITDA) of 2.67 times and debt to [debt+equity] of 28.9%."
"These severe conditions ameliorated during the second half as international commodity pricing began to retreat from record high levels.
"By the end of the period the company was beginning to realise the benefits as higher priced inventory levels were progressively cleared.
"Commodity price increases added $116 million to the company’s cost base during the period, following a $235 million increase in the prior year.
"A severe recessionary environment in New Zealand and continuing tight economic conditions in Australia made trading conditions difficult during the year with depressed consumer confidence resulting in an industry trend down to cheaper alternatives.
“As a result the company’s branded market shares were adversely impacted in both the bread and dairy categories."
In a different sector, Brisbane-based coal group, Macarthur Coal more than doubled earnings for the 2009 financial year as it finally benefited from the impact of record prices for 9 months of the year, and good shipping.
Macarthur said yesterday that net profit for the year to June 30 was $168.558 million, up from $72.684 million in 2008.
Sales revenue rose by nearly 74% to $695.4 million and earnings before interest, tax, depreciation and amortisation (EBITDA) jumped 106.6% to $281.4 million.
Directors have decided to resume paying dividends, with a 13 cents a share final to be distributed.
"Our successful capital raising in June and July this year has positioned us well to pursue our objective to double production in the next five years," Macarthur chief Nicole Hollows said on yesterday in a statement.
And chairman Keith De Lacy said that, following the global finan
