Goodman Fielder has returned to profit but says the retail trading environment in Australia and New Zealand is challenging.
Goodman Fielder reported a $28.6 million net profit for the six months to December 31, compared to a $64.8m loss for the previous corresponding period but said there'd be no dividend.
“Trading conditions, particularly in the Baking and Grocery segments continue to be challenged by significant pricing pressure across several of our core categories,” said chief executive officer, Chris Delaney.
“In Baking, we significantly increased market share in our power brands in Australia and New Zealand from strengthened brand equity, product reformulation and innovation. However, net average selling prices were lower due to the very competitive pricing environment, particularly from increased promotional pricing in the fresh loaf category.
“In response, we are working with our major retail customers to move our major brands in Australia from high/low promotional pricing to everyday low pricing which we believe will provide a better, longer term value proposition by restoring consumer confidence in branded pricing, better align demand with production and enhance value in the category.
“Our Grocery business continues to be impacted by strong price competition in the spreads, flour and cake mix categories, which more than off-set the improved result in dressings and mayonnaise where our Praise brand continued to lead the category by recording its highest ever market share during the period.
“While we continued to face challenging headwinds in Baking and Grocery, our margins in New Zealand Dairy recovered from the lower farmgate milk price following the record increase which significantly depressed earnings last year.
“Meanwhile, the growth momentum from our Asia Pacific business in the prior year continued in the first half of FY15 with earnings up 12 per cent on the prior corresponding period.
“The improved results from the NZ Dairy and Asia Pacific businesses resulted in overall Group earnings being in line with the first half of FY14,” Delaney said.
Goodman is in the process of being acquired by Asian groups Wilmar and First Pacific in a $1.34 billion deal.