Struggling food group, Goodman Fielder (GFF) should no longer be described as being ‘struggling‘ as the 2012-13 result reveals a company that is now well into a recovery phase with improving prospects, which is a long way from the way it looked a couple of years ago as it faced tough trading conditions, aggressive retailing customers and high raw material costs, not to mention the pressure of the high Australian dollar.
But after spending a lot of time in a corporate recovery ward, with intense cost cutting, restructuring, asset sales, job losses and renegotiating key contracts, Goodman Fielder is on the way back as yesterday’s 2012-13 profit report reveals.
The company took losses on asset sales and values plus restructuring costs of close to $600 million in the two previous financial years, and has survived.
Shareholders will be happy to receive their first dividend for two years – at just 3c a share it’s not much, but its better than nothing.
But despite the encouraging signs, the shares ended at 73.5c yesterday, a loss of 5.2%, which might be seen as churlish, given the obvious improvement.
But the shares have risen by nearly 60% in the past year, so investors have been onto the recovery story for a while.
GFF YTD – Goodman Fielder on the way back, resumes dividends
Debt is down 40%, cash flows are improving and profitability is on the improve, despite what the company said yesterday were still tough trading conditions.
Net profit was $102 million in the year to June 30, a long way from the loss of $146.9 million a year earlier.
That’s despite an 11% fall in sales in 2012-13 to $2.23 billion, thanks mostly to asset sales and exiting low margin businesses in Australia and NZ.
Goodman said its earnings from continuing and discontinued operations before significant items were $200.2 million, down 11% from $233 million the year before.
Debt fell 40% to $434.5 million at June 30, a real sign that the pain of the past two years has been worth it and is having a positive impact on the company.
Chief executive officer Chris Delaney said yesterday the strategy to cut costs and debt had helped Goodman Fielder achieve the turnaround in what he described as challenging retail conditions.
"This has been year of major change for Goodman Fielder."
“In a year where we faced the considerable challenges of rising input costs, intense retail competition and some specific operational issues primarily in our Asia Pacific business, the company has delivered a solid result which creates a platform for sustainable earnings growth into the future.
"Normalised EBIT from continuing operations in the second half of FY13 increased by 21 per cent over the first half from an improvement in the company‟s Baking and Grocery divisions and continued strong performance from the Dairy business in New Zealand, partially offset by lower earnings in the Fiji Poultry business in its Asia Pacific division.
"The strategic initiatives we are implementing across the business are starting to take hold," Mr Delaney said.
He said increased competition from in-store supermarket products continue to put pressure on volumes.
The company was cautious about its outlook, despite that second half improvement.
The company said it expects to make further progress in the coming year.
However, it was now financially stronger with a "much clearer focus on the core categories where there is capacity to leverage the company’s leading brands", it said.
