Goodman Fielder focuses on retail

GMF chairman, Jon Peterson, says the profit was in line last November's outlook statement that forecast a subdued first-half, largely due to the worldwide slump in gelatin pricing.

"There was solid underlying performance by all businesses in the first half, except GF Ingredients."

The interim profit figure compares with A$48.8 million the previous year. Total sales fell 4.6% to A$1.53 billion and earnings before interest and tax fell by a similar rate to A$120 million. Net operating profit after tax fell 15% to A$57.7 million.

Earnings before interest and tax in the company's ingredients division fell nearly 20% while its cereals and snacks category grew by 44% to A$31 million.

Mr Peterson says the performance of the company's core retail business confirms the conclusions and direction of the strategic review.

Under the review GMF plans to become the leading retail branded food business in Australasia and the Pacific.

CEO, David Hearn, says the plan will be put in place quickly, with most changes in place by the beginning of July this year, and will deliver significantly improved performance.

"We expect to generate double digit earnings growth each year for the next three years, and drive our return on funds employed above our target of 15% via a much more intensive approach to asset management."

Mr Hearn says there are four key steps to the plan - to concentrate on Australasian retail brands, build a more focused portfolio of power brands, simplify the business and work core assets harder.

He says the sale of the company's gelatin business and its Germantown brand is part of the plan to simplify the business and focus on the core portfolio of retail branded food.

"The next major step will be to integrate our three major businesses in New Zealand - GF Milling & Baking, Bluebird and Meadow Lea into a single powerful national food business.

"We will then move quickly to replicate that process in Australia by combining Uncle Tobys and Meadow Lea into a billion dollar retail grocery business that will have the resources to more than match any competitor in Australia.

Mr Hearn says the company will use the sale proceeds to make a significant capital return to shareholders next financial year.

"We anticipate this capital return will be in the order of A$200 million and will therefore require shareholder approval."

The company has declared an interim dividend of A3.5 cents per share.

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