NORTH RYDE, NEW SOUTH WALES — Goodman Fielder Ltd. posted EBIT for the first half of fiscal 2013 ended Dec. 31, 2012, of A$105.1 million ($108.8 million), up 25% from A$83.8 million in the first half of fiscal 2012. Net sales fell 9% to A$1,172.1 million ($1,213.3 million) from A$1,288 million.

“This interim result is in line with our expectations in delivering our strategic objectives and also demonstrates the growing diversity of our earnings in our three core markets across the region,” said Chris Delaney, chief executive officer. “We have delivered improved earnings in our Asia Pacific business, while a strong increase from our Dairy business resulted in earnings from our New Zealand operations being in line with the previous corresponding period.

“Retail trading conditions in Australia continue to be very challenging, resulting in lower volume and pricing, which impacted our first-half performance. However, the progress we are making, particularly in securing price increases in our Baking and Grocery divisions, is expected to result in improved performance in the second half of the year.”

Goodman Fielder said its Baking business posted EBITDA during the first half of fiscal 2013 of A$38.4 million ($39.8 million), down 11% from A$43.1 million in the same period of fiscal 2012. The most recent results included a A$3 million impact as a result of the decision not to renew a 2013 contract with Mission Foods for wraps.

Sales in the Baking business also fell, easing 2% to A$480.6 million ($497.6 million).

“The baking category, particularly in Australia, remains challenging from the continued impact of private label pricing and in-store baking on proprietary brands, in addition to the pressure of rising input costs,” the company said.

Goodman Fielder said price pressure from supermarket private label bread in Australia continued to place negative price and volume pressure on proprietary branded bread.

The company did note it achieved several milestones in the first half as part of its effort to turnaround the baking business.

“One of the most critical achievements was the improved alignment with retail partners in Australia relating to the costs incurred by Goodman Fielder in continuing to deliver fresh bread on a daily basis throughout Australia,” the company said. “Goodman Fielder has worked collaboratively with its customers to implement a more cost efficient service delivery model. Price increases for proprietary baking products were also implemented in December 2012 recognizing the costs involved in providing a daily fresh delivery service and also relating to the recovery of input cost inflation (ex-commodities) which are expected to reflect improved margins in the second half.

“Additional elements in the Baking division turnaround include generating further manufacturing efficiencies and improving asset utilization through a more streamlined manufacturing footprint and optimizing the product portfolio. As part of these initiatives, bakeries in Rockhampton and Whiteside were closed during the period with the bakery at Cairns scheduled to close in February 2013. Lower value products such as bread rolls have been outsourced to third parties to create further manufacturing efficiencies.

“A specific project to individually review the company’s 180 regional distribution routes has commenced. Approximately 90 routes have been reviewed to date with around 30 routes either eliminated or restructured to improve distribution efficiency.

“Meanwhile, the project to rationalize and optimize the product range has resulted in 160 individual product items (stock-keeping units) being deleted — a reduction of approximately 30%. Collectively, these initiatives are expected to deliver cost savings and margin improvement in the second half of the year in line with the strategic plan.”