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Goodman Fielder 1H profit slumps 77%

Thursday 16th February 2012

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Goodman Fielder, the food ingredients manufacturer whose brands include Edmonds banking products and Vogel’s bread, reported a 77 percent slump in first-half profit, and is looking to ditch its Integro and New Zealand milling units.

Net profit sank to A$21.5 million, or 1.4 Australian cents per share, in the six months ended Dec. 31, from A$93.1 million, or 6.3 cents per share, a year earlier, the Sydney-based company said in a statement. Revenue fell 3.7 percent to A$1.29 billion and earnings before interest, tax, depreciation and amortisation sank 44 percent to A$117.9 million.

“The financial performance of the company is still unacceptable, but we are confident that we are beginning to work our way back towards providing acceptable returns for shareholder,” chief executive Chris Delaney said. “While the trading environment remains very tough we are working hard to turn our business around.”

Last year, Goodman Fielder posted an annual loss of A$166.7 million, taking a A$300 million charge to write-down its baking division, reflecting dwindling sales and rising cost of raw materials. That prompted an overhaul of the business, which has seen it streamline its New Zealand retail unit as part of a plan to strip out A$100 million from its cost base.

The company is looking at divesting its Integro food ingredients business and the New Zealand milling operations, saying it has received unsolicited interest in both units. Processes will probably be launched next month, but Goodman Fielder will only proceed if it optimises shareholder value.

The local milling operations, which include Champion flour mills in Christchurch and Mount Maunganui, and had goodwill, brand and licences valued at A$49.8 million in the company’s 2011 annual report, while the Integro goodwill, brand and licences were worth A$10.7 million.

The company said it expects to return to an annual profit, with normalised pre-tax earnings in the range of A$230 million and A$245 million.

Goodman Fielder won’t pay a first-half dividend. The shares fell 4.6 percent to 62 cents on the NZX and were unchanged at 51 Australian cents on the ASX.

Goodman Fielder’s baking division reported a 47 percent slump in normalised EBITDA to A$43.1 million after losing a major private label contract and rising flour costs.

The home ingredients division’s EBITDA fell 20 percent to A$42.2 million on higher commodity prices, while its dairy business’s underlying earnings sank 24 percent to A$23.6 million.

Integro’s EBITDA dropped 36 percent to A$15.6 million, while the Asia Pacific business lifted earnings 7.4 percent to A$33.5 million.

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