Margins squeeze Goodman Fielder profit

Chief executive, David Hearn, says net operating profit before restructuring costs for the year to the end of June are likely to be 5% down on last year's operating result of A$123.4 million.

Mr Hearn says deteriorating trading conditions in the second half have squeezed margins in several businesses.

"Recent price discounting in retail margarine and competitive conditions in the food service industry in Australia have squeezed margins in our edible oil division."

"Higher prices for imported raw materials and petroleum-based products such as plastic bags and fuel have also increased input costs, especially in our milling and baking business in New Zealand, which we have not been able to fully recover in the fourth quarter."

Although GMF says other businesses - including milling and baking in Australia, Uncle Tobys, Bluebird and GF International - showed improved results, they could not pull back the downturn in the other divisions.

Goodman Fielder has been in restructuring mode for some time, and Mr Hearn says the company will accelerate key elements of its plans to bring forward cost savings.

He says this will as included a new baking structure across Australia to improve customer focus and service, and the sale of the Germantown business and closure of GF Fresh as part of the company's 'fix, close or sell' strategy for non-core businesses.

Meanwhile company chairman, Jon Peterson, has announced initial management succession plans for the business.

This will include a search for a new chief executive although Mr Hearn, who is reaching the end of his contract, will remain in the role until his replacement is found.

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