Goodman Fielder pretax earnings rise

Wednesday 26th August 2009

Goodman Fielder, Australia’s largest baker, reported a 1.2% gain in pretax earnings as raw material costs abated from record-high levels, helping the company fatten its margins.

Earnings before interest, tax, depreciation and amortisation rose to A$375 million from A$370.4 million a year earlier, the Sydney-based company said in a statement. Revenue climbed 6.5% to A$2.85 billion. Net income soared to A$177 million from A$27.7 million, mainly reflecting one-time charges in the year earlier.

“The company has successfully weathered the effects of the last three years of record high agricultural commodity pricing,” it said in the statement. “Input costs are now reducing and the company was able to improve gross margins in the second half and exit the year in a strong position.”

The company shed non-core brands, closed plants and centralised some processing in response to surging prices of raw materials such as raw milk, which stemmed from drought in Australia and global demand. It has stepped up research and development as it seeks to roll out new products, and will spend A$10 million this year, unchanged from 2009.

Goodman Fielder is a veritable supermarket of household food brands in Australia and New Zealand.

Brands include Vogel’s and Molenberg bread, ETA spreads, Edmonds and White Wings baking products, Ernest Adams cakes and biscuits, Meadowlee margarine, Brooks and Huttons small goods, Chesdale cheese and Tararua milk.

The shares climbed 3.2% to A$1.44 on the ASX and have gained 21% in the past three months. The shares are rated ‘outperform’ based on the average of 10 analyst recommendations compiled by Reuters.

"The outlook for FY10 is encouraging,'' it said, without giving a forecast. “The company expects to see efficiency gains resulting from its capital expenditure program and plant rationalisations begin to flow through, underpinned by its strengthened focus on branded everyday foods,” it said in the statement.

Goodman Fielder will pay a final dividend of six cents a share, taking the full year payment to 10.5 cents.

Businesswire.co.nz

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