Poor second half hinders Goodman baking results

by Eric Schroeder
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MACQUARIE PARK, AUSTRALIA — Goodman Fielder Ltd., Australia’s largest food manufacturer, posted profit after tax for the fiscal year ended June 30 of A$133.3 million ($142.7 million), down 17% from A$161.1 million in fiscal 2010.

Net sales fell 4% to A$2,556.2 million ($2,737.4 million) from A$2,660.1 million.

“Following a solid first-half performance, the company suffered a significant profit decline in the second half,” Goodman Fielder said. “Relatively solid performances from the Asia Pacific and Integro businesses and a flat performance by the Home Ingredients division in very difficult conditions were outweighed by declines in the Baking and Dairy businesses.

“Economic conditions in Australia and New Zealand were challenging in the second half, and this resulted in weakened consumer confidence, which impacted retail buying trends as consumers pursued cheaper alternatives.”

Goodman Fielder said its Baking business posted EBITDA during fiscal 2011 of A$130.5 million ($139.7 million), down 21% from A$164.8 million in the same period of fiscal 2010. Sales in the Baking business also fell, easing 4% to A$1,023.3 million ($1,095.9 million).

“The company’s baking business suffered a significant loss of profitability during the second half of the year,” the company said. “This resulted from several factors, including volume reduction, less favorable product mix, high commodity costs, and inadequate cost recovery. The baking business incurred significant volume reduction following the loss of a private label contract in Australia and the business did not reduce manufacturing and logistics overheads quickly enough to compensate.”

Goodman Fielder said investment in research and development, marketing and overall skill capability will help the company grow sales in the future.

“A number of new product variants have been launched, which have contributed to maintaining Helga’s as the category leading brand and Wonder White as Australia’s best selling bread,” the company said. “Wonder White Hi Fibre Plus was also named Fresh Bakery Product of the Year for 2011 in Australia’s largest independent consumer survey of new products. At year end, Helga’s and Wonder White represented 22% of the Australian fresh loaf market.”

Additionally, Goodman Fielder said a new gluten-free facility has been developed in New Zealand, and an artisan bread manufacturing facility is being built in Western Sydney.

“This specialty segment is one of the fastest growing in the fresh baking market, and the company is leveraging off the experience gained from its pilot plant in Melbourne, which has been operating for a number of years as a test bed for market entry,” Goodman Fielder said.

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