Shares in Goodman Fielder, Australasia’s biggest locally-owned food group, rose hesitantly yesterday after CEO; Peter Margin made nice noises about the outlook for the company’s performance in the 2010 financial year.
Mind you, he didn’t give a dollar figure in his comments for profit or sales for the 2010 year, but the shares closed 1 cent higher at $1.55 after he said the trading outlook for 2009-10 was "encouraging".
And, there was no announcement of the sale of the group’s commercial industrial oils businesses, as had been tipped by some analysts.
But there was confirmation from chairman, Max Ould, that the company was talking to one party.
Mr Margin told shareholders at the company’s annual general meeting on Thursday that Goodman had seen a continuation of strong run rates from the June quarter of 2009 to the September quarter
"We believe the outlook for the full year is encouraging," he told shareholders.
Goodman’s 2008-09 net profit after tax reached $177.1 million, up from $27.7 million for the previous year.
Mr Ould said a number of parties had expressed interest in Goodman’s commercial industrial business, which processes edible fats and oils and supplies food manufacturers and wholesalers in Australia and New Zealand.
"The company is currently in detailed discussions with one preferred bidder, with an announcement on the outcome of these discussions likely to be made shortly," he said.
The divestment decision followed a change in strategic direction for the company, he said.
Goodman decided earlier in this year to change strategic direction, focusing now on reducing exposure to commodity cost volatility, innovation in its retail branded products, and cutting operating costs.
"I am pleased to be able to report that commodity costs have now retreated to more normal levels and that consumers are reverting to their usual buying habits," Mr Ould told the meeting.
"These trends became evident in the final quarter of the last financial year and have continued into this financial year. Our raw material pricing for our consumer brands is back within a manageable range and the incursion of private label on most of our category market shares is either retreating or has levelled off.
Ensuring an adequate supply of raw materials is often a challenge in times of world shortages and price volatility. The company actively manages the risk around commodity supply by forward buying from three to six months supply to ensure we have adequate cover to fulfil the demand for our products.
Meanwhile Sonic Healthcare, the country’s major pathology and radiology services provider yesterday told shareholders it remained on track for a 10% to 15% rise in after tax profit for the current financial year.
Sonic chief executive Colin Goldschmidt told the AGM that the guidance was based upon Sonic’s 2009 full year net profit of $315 million and assumed 2009 full year currency exchange rates.
But he warned that the strong Australian dollar may affect reported results by cutting offshore earnings.
The company is investing in Germany, Switzerland, the UK and New Zealand after becoming the biggest pathology operator in Australia.
Like so many other emerging Australian multi-nationals, the strong Australian dollar is going to be a perennial problem as they grow from now on.
So will be rising local interest rates.
Dr Goldschmidt said Sonic’s underlying businesses, in local currencies, were tracking strongly.
The company was seeing the strong revenue growth in Australian pathology operations continuing into the 2010 full year.
Pathology operations in Germany had performed strongly into the 2010 year so far, and UK pathology had a positive outlook for ongoing growth.
Sonic’s radiology operations had experienced difficult conditions in the 2009 year but were expecting an improved performance through 2010.
Dr Goldschmidt said Sonic had around $1.02 billion available to it for acquisitions.
There was a growing pipeline of opportunities, and Sonic was in a strong position to resume acquisition activities.
Dr Goldschmidt said Sonic was in a "strong and secure position".
The shares rose 2 cents to $14.20 in yesterday’s sluggish local market.
