“This is a disappointing result in the context of where the company had expected to be at this point
in the strategic plan,” he said.
“We had initially expected that in FY14 Goodman Fielder would return to profitable growth, building
on the restructuring work we had completed in the initial phases of the strategy to re-focus the
business, align the cost base and restore the balance sheet.
“While we experienced growth in some areas of the portfolio, the record increase in the farmgate
milk price in New Zealand, together with the increase in the A$ wheat price resulted in significant
input cost pressures which we were unable to fully recover through pricing.
“Additionally, the Australian Baking business was impacted by increased freight and transport
costs to ensure we continued to deliver fresh product to our customers while we addressed
reliability issues at some of our major manufacturing facilities.
“Our Grocery business continued to face a very challenging retail trading environment, which was
compounded by our new product development in Spreads not being successfully ranged across all
retailers.
“In response to this earnings decline, we have accelerated cost savings initiatives across the
business by implementing a more simplified corporate structure from which we expect to generate
an additional $25 million in annualised cost savings by FY15.
“While we continue to address these short term challenges, we remain focused on our strategic
objectives which are aligned to generating value over the medium term.
“That includes an increase in branded core category innovation which has resulted in an improved
share in our power brands in Baking, particularly through the launch of new product development
into new categories, such as gluten free and lower carbohydrate products in both Australia and
New Zealand.
“It also includes the $25 million investment we are making in our Christchurch UHT plant to
leverage our existing export capacity of UHT milk to the rapidly growing premium UHT market in
China.
“While FY14 was a significant step back from where we had expected to be, we remain committed
to building a business which can deliver sustainable growth over the medium term,” Mr Delaney
said.
