Goodman Fielder: gives update on strategic review

Sydney / AU. (gfl) Goodman Fielder Limited provided an update on the progress of its Strategic Review, the commencement of which was announced at the release of its full year results in late August (see b:eu on 2011-08-31). The company also provided an update on current trading conditions.

«In the Strategic Review our clear priority is optimising shareholder value and delivering sustainable earnings growth. We are considering all options to achieve this», said Chris Delaney, Goodman Fielder´s new Managing Director and Chief Executive Officer since 04 July. Chairman Max Ould: «Delaney has been working tirelessly since his appointment to stabilise the business and work with the Board to chart a new direction for the company. The Board is very pleased with the significant work that has been undertaken under Chris´s stewardship and the progress already made on what is a difficult journey», Ould said.

Managing Director´s Statement

«We have identified company-wide ongoing cost savings of 100 million AUD of which 40 million AUD has already been actioned. Work plans are in place to deliver a further 25 million AUD in financial years 2013 and 2014, with 35 million AUD to be targeted for delivery in financial years 2014 and 2015. These savings will be used to reinvest in the business and to improve the company´s bottom line. The development of the strategic plan is continuing and we have already made solid progress. Currently we are concentrating on three key value creating areas: portfolio prioritisation, group structure renewal, and operations and supply chain optimisation».

Goodman Fielder could sell milling and oils

«We have determined that our retail businesses are our portfolio priority and therefore our commercial milling and oils businesses, although attractive and well performing, are considered to be non-core. We are currently exploring other options for these businesses which will maximise shareholder value and this may involve sale or joint venture. A number of other businesses are currently under review to evaluate their strategic fit with our portfolio».

Retail businesses are core businesses

«As a first step in group structure renewal we have consolidated our three retail divisions in New Zealand into one integrated team to provide one face to our customers and to enhance efficiency. Work is well advanced on the analysis of the benefits of adopting a similar business model in Australia».

Closures in Bunbury and Rotorua expected

«Our manufacturing and supply chain will be optimised and work is advancing on the development of a new Baking business model with potential efficiencies and cost savings already identified», Delaney said. «The Strategic Review also identified the opportunity to consolidate our manufacturing base in Integro and Baking and eliminate unused capacity through proposed plant closures in Bunbury, Western Australia and in Rotorua, New Zealand».

Company refinances 500 million AUD syndicated loan facility

«We have also recently taken action to significantly strengthen our balance sheet, including the successful execution of a 259 million AUD capital raising and a new 500 million AUD bank refinancing facility. This will provide the company with increased headroom within our financing facilities and give sufficient flexibility to enable us to pursue value accretive initiatives», Delaney said. «The next bank syndicate refinancing is not required until financial year 2014».

Board of Directors

As well the company has strengthened its top leadership team with several new appointments: Chris Froggatt, Independent Non-executive Director, Chairman of the Human Resources and Remuneration Committee and Member of the Corporate Risk Committee and the Nomination Committee. Clive Hooke, Independent Non-executive Director, Chairman of the Audit Committee and Member of the Corporate Risk Committee. Ian Johnston, Independent Non-executive Director, Member of the Human Resources and Remuneration Committee and the Audit Committee. Steve Gregg, Independent Non-executive Director, Chairman of the Corporate Risk Committee and Member of the Audit Committee. Peter Hearl, Independent Non-executive Director, Member of the Audit Committee, the Nomination Committee and the Human Resources and Remuneration Committee.

The business is beginning to stabilise

Despite the continuation of a challenging external environment the company reported that the business is beginning to stabilise due to the strengthening of fundamentals in Baking and the impact of cost savings programs enacted in the first quarter. «We can provide no specific guidance due to the volatility that exists in the market and because our recovery plans are still at an early stage», Delaney said.

«I believe that in the last four months we have made good progress in setting the foundations for turning around the company´s performance. However we are still a long way from where we need to be. We have early indications that the trends are beginning to turn more positively but we still have much hard work in front of us to achieve an acceptable performance for our shareholders. I look forward to updating the market on our progress in February at the release of our half year results».