Goodman Fielder Ltd., Australia’s largest baker, had a 32 percent drop in second-half profit after one-time charges and discounts on groceries crimped returns.
Net income fell to A$70.8 million ($63.5 million) in the six months ended June 30 from A$103.4 million a year earlier. Second-half figures were calculated by subtracting first-half earnings from the A$161.1 million full-year profit the company reported today. The full-year result compares with a June 24 forecast of profit between A$158 million and A$165 million.
“The company experienced a highly competitive business environment throughout the year coupled with low pricing inflation,” Sydney-based Goodman Fielder said. “Consumers tended to pursue value offerings and this contributed to a very competitive market characterized by aggressive discounting.”
Income from the company’s Asia Pacific and New Zealand businesses was reduced when converted into Australian dollars as currency gains reduced the value of overseas sales, according to the statement. Earnings in the 2011 financial year are forecast to post “mid to high single-digit percentage growth” from the “normalized” annual result announced today of A$183.5 million, the company said.
The normalized result means taking out non-recurring costs of A$22.4 million, including writedowns triggered by changes in New Zealand tax rules and costs related to the failed sale of the company’s commercial oils business to Cargill Inc. after it was blocked by Australia’s antitrust regulator, the baker said.
‘Muted’ Revenue Outlook
“The outlook for revenue growth is likely to be particularly muted,” JPMorgan Chase & Co. analyst Stuart Jackson wrote in a research note yesterday. “The recent increase in wheat, palm oil and dairy prices will put additional pressure” on the company’s margins.
Second-half sales declined 6 percent to A$1.29 billion, according to Bloomberg’s calculations based on the full-year revenue of A$2.66 billion.
Second-half Asia-Pacific earnings before interest, tax, depreciation and amortization fell 5.5 percent to A$27.7 million. Ebitda for the home ingredients division dropped 16 percent to A$47.5 million, according to Bloomberg’s calculations. Baking Ebitda rose 5.6 percent to A$82.8 million and dairy Ebitda rose 13 percent to A$29.3 million.