Australia’s largest locally-owned food company, Goodman Fielder is looking at a 15% drop in first half 2009 earnings, and probably a similar level for the full June 30 year.
The company’s annual meeting in Sydney yesterday was told the group was on track to meet analysts’ forecasts for a lower profit.
"We anticipate that our first half profit results will be around 15 per cent lower than the prior corresponding period due to time lags in the recovery of an additional $100 million of increased commodity costs and the impact of increased private label volumes," chairman Max Ould told the meeting.
"In the second half however we will start to see the benefit of retreating commodity pricing and we expect the company to exit the year in a solid position."
"We are now four months into the current financial year.
"Sales are up 12% but we anticipate that our first half profit results will be around 15% lower than the prior corresponding period due to time lags in the recovery of an additional $100 million of increased commodity costs and the impact of increased private label volumes.
"Therefore at this time we are comfortable with the current market expectations of our reported NPAT earnings in the range of $191 million to $204 million.
"A further update will be provided at the time of our first half results."
Those higher commodity costs, along with energy, remain key variables for the company.
The expected $100 million increase this year will make more than $400 million in extra commodity costs since the 2007 financial year, plus millions more in higher energy charges.
The company incurred higher commodity costs of $240 million in 2007-08.
The company incurred a $30 million bill for higher energy transport and packaging costs which were recovered through price rises and cost cutting.
The market took all this in its stride and the shares closed down 3.9% at $1.47, a loss of 6c.
In what was a very difficult year in 2008, the company reported a 10.2% increase in revenue to $2.675 billion and net profit, on a normalised basis, rose marginally to $220.7 million.
After a series of one-off costs (mainly restructuring) Goodman Fielder, earned a net profit of $27.7 million in 2007-08.
Mr Ould told the meeting that the credit crunch had had a severe impact on the availability and cost of credit which is likely to constrain many businesses in the near future.
"Earlier in this calendar year we were able to refinance maturing debt facilities with a competitively priced $670 million long term debt facility which has extended our debt maturity profile and maintained the company on a secure financial footing.
"In addition, we recently finalised a $100 million debt facility to provide further flexibility for short term capital initiatives," he said.
SP AusNet, the electricity and gas distributor controlled by Singapore Power, has reported an 11.3% increase in first half Earnings Before Interest Tax Depreciation and Amortisation (EBITDA) to $405.2 million and a 2.4% increase in underlying Net Profit After Tax (NPAT) to $122.5million.
The profit after tax was cut to $92.2 million by the impact of a charge for the replacement of meters in Victoria.
The company yesterday told the ASX that the result "was driven by an 8.9% uplift in revenues resulting from favourable price/volume and weather impacts and the commencement of the new transmission and gas regulatory periods, under which SP AusNet was allowed an increase in revenues".
The Directors declared an interim distribution to securityholders of 5.927 Australian cents per security, and increased the fully franked dividend component to 32.2% of the total distribution.
Sales rose 8.9% to $635.5 million.
SPN’s securities rose 1c to $1.18, a rare rise in a market that fell to yet another recent low, driven down by a 4.2% in the ASX 200.
SP AusNet said it took a $30.3 million after-tax charge on meters that will need to be replaced under a Victorian government program to roll out so-called smart meters that allow utilities to vary prices through the day depending on demand.
"SP AusNet is on target to meet underlying net profit after tax guidance for the full year after adjusting for the impairment to meters,”
"Revenue and EBITDA growth of around 8% for the full year is in line with previous guidance.
"The seasonality of revenues, particularly on the gas distribution network due to higher demand for heating during the winter months, results in a larger proportion of revenues being earned in the first half of the year.
"Operating costs are more evenly spread over the full year, resulting in lower margins and NPAT in the second half of the year.
"Organic growth on the networks has been strong, with high levels of demand for energy infrastructure from new housing developments within the distribution network areas.
"New windfarm and gas fired generation connections on the transmission network will also ensure growth in SP AusNet’s regulated asset base, providing improved revenues in future periods.
"SP AusNet will continue its focus on expanding and commercialising niche asset services, in particular metering and technical services.
"The new operational agreements with the Jemena group of companies (formerly part of the Alinta group and now a member of the Singapore Power Group) provide SP AusNet with a footprint in NSW and the contribution from these arrangements is expected to increase over
