Bread maker blames loss on supermarket bunfight
THE battle between Coles and Woolworths rolled into the bread category yesterday as Goodman Fielder fell to a $167 million full-year loss from a $161 million profit the year before.
THE battle between Coles and Woolworths rolled into the bread category yesterday as Goodman Fielder fell to a $167 million full-year loss from a $161 million profit the year before.The breads and spreads manufacturer listed the price war between Coles and Woolworths as the first factor in its plunging earnings.It also listed high prices for raw ingredients and the slump in consumer spending.Coles and Woolworths slashed the price of their private-label bread to $1 a loaf in the June half.On top of the savage discounting, Goodman Fielder lost its private-label contract.The rapid descent of the company, known for brand names such as Helga's, Wonder White, MeadowLea and White Wings, led to warnings by analysts that the company might be in peril unless it took dramatic action.The 2011 result included a $250 million impairment charge to the goodwill of the group's Australian baking operations and a $50 million impairment charge to its New Zealand baking operations. Earnings before interest and tax in its main bakery division plunged 20.8 per cent to $130.5 million for the year to June 30.New chief executive Chris Delaney, who in July replaced Peter Margin, began slashing costs in the company's bakery division three weeks ago. So far he has cut overheads by $11 million as part of a three-year plan to deliver a sustained improvement.Mr Delaney said the group's 2011 results were "very unacceptable" and that the company's response to challenging trading conditions had been "ineffective".He said the company aimed to stabilise its business. This would include restructuring its business model this financial year.Nomura analyst David Cooke said the initial $11 million reduction in overheads had been just scrapping a layer of sales and finance. "It gets harder from here," he said.The company will pay a final dividend of 2.5? on November 3, taking the total dividend for the year to 7.75?.The shares firmed 1? to 77.5?. With AAP