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Bread and spreads maker Goodman Fielder has revealed a full-year loss of $A166.7 million - $210 million when converted to New Zealand dollars - as it struggles in the bread business in Australia.
The big fall in profits – of more than 200% - came in the second half after it took on a $A300 million non-cash impairment on its baking division in Australia ($A200 million) and New Zealand ($A50 million in NZ).
The downgrade was signaled a fortnight ago when it was found initiatives taken in April hadn’t been enough to avert weak trading across the Tasman.
Goodman Fielder blames lower volumes following the loss of a private label contract in Australia, higher ingredients costs and a less profitable product mix after the resurgence of cheaper private label products – particularly in the bread segment.
With the write-down for goodwill stripped out, the underlying net profit was $A133.3 million, down 17.3% or $27.8 million from $A161.1 million the previous year.
Earnings fell $A103.9 million or 3.9% to $A2,556.2 million as the strong performance from the Asia Pacific and Integro businesses and a flat performance by the home ingredients division were outweighed by declines in baking and dairy.
Net debt at June 30 was $A35 million higher at $A955 million - also due to the lower second-half earnings in baking.
The strong Australian dollar also negatively impacted the translation of earnings from the New Zealand and Asia Pacific businesses.
The company’s new chief executive Chris Delaney, appointed in July, says no guidance will be given on the current financial year until the annual shareholders meeting in November.
A restructure of the baking division was started in early August to simplify business operations reduce costs and make it more increase efficiency had seen $A11 million off overheads already.
A comprehensive review of the baking, dairy and home ingredients businesses in NZ is also underway to find opportunities for cost cutting.