By Phil Boeyen, ShareChat Business News Editor
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Friday 8th March 2002 |
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Although revenue only rose 0.4% to 1.539 billion in the six months ended December, earnings before interest and tax was up by 9.2% to $131 million and net operating profit was 18.5% higher at $68.4 million.
Bottom line profit rose 162% to A$98.4 million, reflecting the A$30 million contribution from last year's A$80 million profit from the sale of the Germantown subsidiary. The previous year's interim result also included a A$20 million charge for rationalisation and restructuring the business.
GMF chief, Tom Park, says he is pleased with early progress on a number of initiatives identified in the strategic action plan last year including the sale of non-core businesses, working core assets harder and improved capital management, with net operating cash flow up A$112 million.
"The half year profit result across the group is credible given the internal restructuring the company has gone through and difficult trading conditions, especially in the food service industry. Additionally, we met our commitment to no net abnormals.
"We have also moved aggressively to implement capital management and productivity initiatives evident in lower overheads, improved operating cash flow, and return on funds employed rising towards our mid term target of 15%."
Mr Park says the company's global ingredients business performed strongly on the back of productivity work and firmer gelatin prices but notes that ongoing businesses are not yet performing to their potential, as seen in the modest net sales growth in the first half.
"Going forward, we have focused on all elements of productivity as the fuel for growth, including conversion costs, materials management, formulations, yields, distribution and warehousing and overheads."
The company also announced that regulatory officials in the United States had approved a revised sales agreement for the sale of the Leiner Davis gelatin business to DGF Stoess AG.
Under the new deal DGF Stoess will acquire all of the gelatin business for US$112.5 million, except for the Leiner Davis operations in the United States and Argentina. The previously agreed price was US$170 million.
"The gelatin operations remaining in our hands are a viable business in their own right that will generate adequate returns," says Mr Park.
"However, consistent with our long term strategy to focus on retail branded businesses, we will look to divest the remaining gelatin operations in due course in a way that protects employees and maximises shareholder value."
Mr Park said that Goodman Fielder would use part of the sale proceeds to fund the proposed A$100 million second tranche of the share buy back subject to all approvals and the share buy back rules of the Australian Stock Exchange.
GMF directors have declared an interim dividend of A3.5 cents per share franked to 50%.
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