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The Sydney Morning Herald

Goodman Fielder leaner and firmer

Author: Mark Todd
Date: 07/09/2002
Words: 392
          Publication: Sydney Morning Herald
Section: Business
Page: 69
Goodman Fielder's attention to cutting costs and improving productivity in 2001-02 allowed the food group to make it through a year of asset sales, restructuring, and rises in the cost of key raw materials with earnings up solidly.

Net profit in the 12 months to June 30 tallied $162.4 million, against a $78.3 million loss a year ago. But both numbers were affected by one-off items such as writedowns or divestments, making the increase in operating profit to $132.4 million from $118 million a more accurate reflection of the group's labours.

Goodman Fielder made good on its promise to improve return on funds employed to 15 per cent, up 3.8 points for 2001-02, hitting the target a year earlier than forecast. ``We feel this is a creditable result in what has been an important transition year," said chief executive Tom Park.

``We've delivered against all the core targets we've identified for the year. Certainly our profit after tax up 12.2 per cent is above market expectations."

Mr Park said the group would use its lowly geared balance sheet for acquisitions, reinvesting in core brands, or some capital return to shareholders similar to its current $200 million buyback. The board will consider options in the next few months as proceeds from the $200 million milling business sale to Graincorp/Cargill are banked.

Cuts to overheads and more efficient work processes in 2001-02 were worth $51 million, well ahead of a target for $30 million. The group had a 4.6 per cent rise in earnings before interest and tax to $254.2 million.

The savings, and a decision to raise bread prices, mitigated a 13 per cent rise in wheat costs and a 23 per cent hike in oil.

Mr Park said the divestment of assets, in particular the company's milling and ingredients businesses, would leave net profit lower in 2002-03. However, EBIT for the company's existing core businesses was likely to improve at a similar rate to the second half's 4 per cent.

Full year sales eased 3.4 per cent to $2.96 billion with modest underlying growth further eroded by asset sales and tough international markets. Goodman Fielder declared a 50 per cent-franked final dividend of 4c a share, payable October 4. The full-year payout was 7.5c. The share price closed up 2c at $1.66.

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