Goodman seeks efficiency

Press, 4 August 1983, Page 22

Goodman seeks efficiency

PA Wellington The wage and price freeze made recovery of costs difficult for the food manufacturer, Goodman Group, Ltd, and awakened consumer demand for many products, said the group managing director, Mr G. P. Shirtcliffe, in the annual report to March 31. In these circumstances, the directors were reasonably satisfied with the 17.2 per cent profit lift, he said. “While we would generally prefer to support a free-market philosophy, your board and management chose to adopt a positive view of the current business climate and to focus on better utilisation of existing resources through improved operational and financial management,” he said. The results of this policy contributed to an improved

second-half performance and a satisfactory full-year result.

The company’s operational policies have centred on improved efficiency, better marketing, and maintaining investment. The first was not a synonym for simply cutting costs, said Mr Shirtcliffe. Aulsebrook’s has reduced production costs by switching from electric to gasfired biscuit ovens. The flour-milling division has remarketed traditional products in different ways. During the year $11.3M was invested in acquisitions, mostly on new bakeries, compared with SI.4M the previous year.

Goodman’s financial strategy covered reduction of financial costs, restructuring the trust deed and gaining overseas banking facilities.

In 1982, the profit margin on sales lifted from 4.1 per cent to 5.2 per cent. In 1983, it fell to 4.7 per cent because of the price freeze, aid Mr Shirtcliffe. A reduced ratio of stocks-plus-debtors to sales saved interest charges of at least SI.IM before tax. To ensure that opportunities are not turned down because of funding delays the company completed a SUS2OM standby arrangement with overseas banks during the year. As a group, Mr Goodman sees C.E.R. as beneficial. Potential problems are:— © Remaining uncertainties about duties and access restrictions. © Tasman and internal transport costs and efficiencies. @ Packaging costs in New Zealand. @ Comparative values of

the New Zealand and Australian dollar. Mr Shirtcliffe lamented the export of agricultural and horticultural produce with little value added. “Given the right attitudes by all concerned, including the Government, the Goodman Group has the potential to be at the core of an internationally competitive value-added food industry with New Zealand as only one of its markets,” he said. The board had decided against adopting currentcost accounts because of the costs, he said. As previously reported, group net profit totalled $14,362,000. An ordinary dividend of 24 per cent was maintained. Return on average shareholders’ funds was 18 per cent (22 per cent in 1982). Net tangible asset backing per 50c share stood at $1.44 ($1.51).