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Goodman Fielder 2013 earnings will fall on higher marketing spend, lower poultry sales

Tuesday 25th June 2013

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Goodman Fielder, the biggest food company in Australia and New Zealand, expects full-year normalised earnings to fall after it sold less poultry and spent more on marketing.

Earnings from continuing and discontinued operations before significant items will be A$195 million to A$200 million in the year ending June 30, the Sydney-based company said in a statement. That's less than the A$233 million reported last year.

Goodman is selling assets, cutting costs and streamlining its brands while repaying debt as it faces increasing competition from supermarket in-house baking and grocery brands.

"While retail trading conditions, particularly in the Australian supermarket channel, remain challenging, Goodman Fielder continues to make steady progress on the key initiatives under the company's three-year strategic plan to restore sustainable earnings growth," the company said today.

Goodman expects second-half earnings before interest, tax and significant items from continuing operations to rise 15 to 20 percent from the first half, as it benefits from an improvement in its baking unit and has stable to positive earnings growth in its grocery and dairy divisions, the company said. Its Australian baking unit will start a new private label bread contract July 1.

Shares in Goodman Fielder were unchanged at 86 cents, having gained 6.2 percent this year.

Full-year earnings for the Asia Pacific unit will be lower than last year because a higher-than-expected livestock mortality rate at its Fiji poultry unit in the second half reduced the company's ability to supply poultry to the market and increased its remediation costs, Goodman said.

In 2012, Asia Pacific normalised ebitda rose 13 percent to A$66.3 million.

The poultry business has stabilised over the past two months and the Asia Pacific unit should return to earnings growth in the 2014 financial year, the company said.

Goodman said its financial position continues to strengthen as the proceeds from divestments are used to lower net debt while operational cash flow remains strong. It will detail its 2013 full-year earnings on August 14.

Goodman didn't provide a forecast for its net earnings. The company narrowed its net loss to A$146.9 million in 2012 from a loss of A$166.7 million in 2011.

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