Sydney / AU. (gfl) Goodman Fielder Limited announced the successful negotiation of a private label bread contract and also provided an update on trading conditions for the financial year ending 30 June 2013 (FY 2013).
Private Label Bread Contract
Goodman Fielder has successfully negotiated a private label bread contract within its Australian Baking division. The contract is effective from one July 2013. «The contract represents the achievement of another strategic milestone in the continued turnaround of our Baking business», said Goodman Fielder CEO Chris Delaney.
Update on trading conditions
While retail trading conditions, particularly in the Australian supermarket channel, remain challenging, Goodman Fielder continues to make steady progress on the key initiatives under the company´s three-year strategic plan to restore sustainable earnings growth.
Goodman Fielder expects an increase in second half earnings before interest and tax (Ebit) from continuing operations – before significant items – of around 15 to 20 percent compared to the first half as the turnaround in the Baking division continues, together with stable to positive earnings growth in its Grocery and Dairy divisions.
Second half earnings in the Asia Pacific division have been impacted primarily from a one-off capacity issue which affected the company´s poultry business in Fiji.
A higher than expected livestock mortality rate reduced the company´s ability to supply poultry to the market. Resulting lower volumes, together with higher costs associated with re-mediating the issue, impacted earnings in the second half. The performance of the poultry business has stabilised over the past two months as corrective measures were implemented.
While Goodman Fielder is confident that this one-off capacity issue is being appropriately addressed to restore earnings growth into FY 2014, Ebit – before significant items – for the Asia Pacific division in FY 2013 is now expected to be lower than the previous year.
At a Group level, Ebit from continuing and discontinued operations – before significant items – for FY 2013 is expected to be in the range of 195 to 200 million AUD. This result includes a significant increase in direct marketing expenditure on the prior year as the company reinvests to support branded innovation across its core categories.
The company´s financial position continues to strengthen as the proceeds from divestments are used to lower net debt while operational cash flow remains strong. Goodman Fielder expects to announce its full year results for FY 2013 on 14 August.
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