Goodman Fielder 1:4 on strong result

Press, 25 September 1987, Page 10

Goodman Fielder 1:4 on strong result

Goodman Fielder will reward shareholders with a one-for-four bonus share issue after a surge in taxpaid earnings for the June year to $174.5 million (sAustl4lM). The result compares with the previous year’s $28.7M (sAust23.6M), which was the aggregated profits of Goodman Group, Fielder Gillespie and Allied Mills. The trio merged in April, 1986. The Goodman Fielder directors said the result inflected the success of the companies’ integration and their subsequent rationalisation and reorganisation. They said the profit represented earnings per share of 33.6 c (Aust27.7c), more than double the previous year. k The $174.5M result was before extraordinary gains of $72.2M (sAusts9.6M), largely from Goodman Fielder’s 29 per cent of the profit made by Wattie Industries on the sale of its shareholding in N.Z. Forest Products. The preliminary report shows group sales of $l.B billion (sAustl.B billion), up from $759M (sAust624M) the previous year. The directors declared a final dividend of 7.3 c (Aust6c) a share on capital increased by the one-for-three bonus issue made last June. That is equivalent to 9.7 c

(AustBc) a share on the pre-bonus capital. The directors said that a substantial portion of the dividend would be tax free in shareholders’ hands. With the interim dividend of 6.08 c (Austsc), the final represented an increase of 30 per cent on dividends paid the previous year, they said. Referring to the new, one-for-four bonus issue, directors said that as a result of the excellent performance in 1986-87 and likely favourable trading in the present year they expected.the total dividend of 13.3 c (Austllc) would be maintained on the bonus-increased capital. Goodman Fielder’s managing director, Mr Duncan McDonald, said strong performances in each of the company’s five operating groups made a significant contribution to the profit increase. Rationalisation plans were well advanced in the. groups most affected by the merger: Industrial groups, consumer foods, and Australian bakeries. Further rationalisation benefits were being achieved in this year and Goodman Fielder’s strong market shares had been maintained during the period of change, he said. The largest group, consumer foods, was restructured, including the formation of a specialist marketing and sales division, Eta Food Services, to serve the rapidly growing industrial and food services sectors. Substantial rationalisation of production and warehouse facilities enabled the group to reduce manufacturing and distribution costs, Mr McDonald said. The operations of the origi-

nal ETA Foods, now 100 per cent owned, and of White Wings are brought within the consumer foods group and integration of these businesses has begun. The industrial group underwent significant changes including the amalgamation, closing and sale of some unprofitable feed and flourmilling facilities in New South Wales. The starch division rationalised product ranges in its three wheat-starch plants with reductions in delivery costs. The Australian bakeries group continued to make very good progress, in what is generally regarded as a difficult industry, said Mr McDonald. The group successfully completed the first stage of rationalisation in. New South Wales and improved bakery operations and expanded in Western Australia with the purchase of bakeries at Bunbury and Geraldton. The gelatine group performed well, he said, profits from the North American Banner Gelatine Products and Allied Flavours being included for the first time. New processing technology was introduced at the Botany plant in New South Wales, and since year end, the company had purchased a substantial interest in the • Brazilian gelatine manufacturer, Leiner do Brasil, Mr McDonald said. Several nonfood businesses were divested at a profit during the year. The profit improvement in Goodman Fielder New Zealand resulted from increased sales and profit'in the bakeries operations. Quality Bakers New Zealand, and in the textile and garment manufacturing activities of Bonds

(N.Z.). In each of these divisions there was substantial investment in capital improvements. The cereal milling division, New Zealand Cereal Foods, faced extensive price cutting following the deregulation of the New Zealand flour industry in February. Since balance date the company has entered into an option agreement to sell 144 M shares in Elders. The sale would release sAust7ssM (representing a significant profit on book value) which would expand the company’s equity base and assist in financing further growth in its core businesses. In the same period the company acquired from Fletcher Challenge Limited its shareholding in the British food manufacturer, Ranks Hovis McDougall, bringing Goodman Fielder’s total shareholding in that company to approximately 21 per cent. The directors said that such a purchase was a necessary step towards equity accounting of the RHM investment, and that only dividend income, not the equity share of profits of RHM, was included in Goodman Fielder’s 19861987 results. The company hopes approval from the New Zealand Commerce Commission to the proposed merger of Goodman Fielder and Wattie Industries, will be given before the end of October and that the benefits of the merger will be obtained during the current financial year. According to directors the. outlook for Goodman Fielder remains strong, with the company well positioned for further growth, particularly in related businesses offshore.