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Goodman Fielder fattens margins in first half, lifting profit by 25%

Thursday 25th February 2010

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Goodman Fielder posted a 25% jump in first-half profit after cutting manufacturing and logistics costs and benefiting from more stable raw material prices.

Net income rose to A$90.3 million, or 6.7 cents a share, in the six months ended December 31, from A$72.3 million, or 5.5 cents, a year earlier, the Sydney-based company said in a statement today. The shares fell almost 4% to A$1.48 as profit lagged behind the A$92.4 million forecast in a Bloomberg survey and it provided no full-year guidance.

Goodman, whose products range from Meadow Lea margarine to White Wings baking mixes, Helga’s bread and Meadow Fresh milk, has been rationalising its brand portfolio to concentrate on its most-profitable lines, and in December agreed to sell its edible fats and oils unit to Cargill Inc. for A$240 million, subject to regulatory approval. Fresh baking led the improvement in earnings margin in the first half, as it expanded its product range.

The profit gain “was underpinned by substantial and continuing efficiency improvements in manufacturing and logistics performance,” the company said.

“These gains were augmented by margin expansion which flowed from a less volatile commodity cost environment, a significant increase in investment in the company’s brands and improvements in the company’s branded product mix,” it said.

The company’s EBITDA margin for fresh baking, the company’s biggest business, widened to 14.6% in the first half from 11.2% a year earlier as earnings jumped 32%, even as sales edged up just 0.7% to A$496.8 million.

For fresh dairy and meats, the margin expanded to 13.9% from 7.5% as revenue fell 8.5% to A$222.4 million. The EBITDA margin on home ingredients rose to 20.1% from 18.6% as sales fell 3.3% to A$258 million.

For Goodman’s Asia Pacific business, the margin widened to 18.9% from 12.6% on a 15.3% decline in sales to A$159 million.

Commercial was the only business that showed a decline, with the EBITDA margin shrinking to 5.8% from 11.2% as sales dropped 20% to A$229.9 million.

The company said its businesses are continuing to “perform solidly” into the second half, in the face of a “more moderate commodity cost environment” though the outlook was too uncertain to make a full-year forecast, which would also be affected by the timing of the sale of the edible oils business.

 

 

 

 

Businesswire.co.nz



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