Goodman Fielder, the food manufacturer whose brands include Edmonds baking products and Vogels bread, says underlying annual net profit has fallen 17.3 per cent after a significant decline in the second half, particularly in its baking and dairy divisions.

Net profit before a $300 million write-down in the value of its baking division fell to $133.3 million for the year ended June 30 compared with $161.1 million the previous year. Sales fell 3.9 per cent to $2.56 billion.

The write-down turned the bottom line into a $166.7 million net loss. The company had reported a 2.1 per cent rise to $93.1 million in first-half net profit.

Economic conditions in Australia and New Zealand were challenging in the second half and this resulted in weakened consumer confidence which impacted retail buying trends as consumers pursued cheaper alternatives, Goodman Fielder said.

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The baking division's profitability slump in the second half reflected lower sales, a less favourable product mix, high commodity costs and inadequate cost recovery, it said.

As commodity prices rose and the company lost a private label contract, in Australia fierce retail competition drove price discounting, making cost recovery more difficult to achieve.

A resurgence in private label, or generic, products compounded the impact, it said.

"Management underestimated the impact of these changes and therefore the initial response was inadequate.''

The baking division's operating profit rose 6.4 per cent in the first half but was down 20.8 per cent for the year.

Newly appointed chief executive Chris Delaney, who started on July 4 and replaced Peter Margin who left the company at the end of April, has moved quickly to reduce overhead costs, cutting $11 million from the baking business' overheads already, Goodman Fielder said.

Delaney is personally leading the baking division until a new manager is appointed.

Delaney is also reviewing the dairy and home ingredients businesses in New Zealand to determine the opportunities to capture scale advantages by integrating operations and consolidating the management structure.

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The dairy division's operating earnings fell 15.3 per cent for the year after falling 1.9 per cent in the first half.

Goodman Fielder said the raw milk price rose about 50 per cent to a record over the year and this increase became more difficult to recover in the second half as consumer resistance to price rises strengthened. This was made more challenging after our major competitor froze the pricing on its consumer products.

Among the other divisions, home ingredients' operating profit fell 0.4 per cent, the Asia-Pacific division's rose 1.2 per cent and the Integro edible fats and oils business' jumped 44.4 per cent.

The company said that reflected and improved business mix, including an increase in value-added dairy sales and less reliance on commoditised oils.

Goodman Field didn't provide any guidance for the year ending June 2012, citing Delany's review and current market conditions. It said it intends to provide an update at the November 24 annual shareholders' meeting.

The company will pay a 2.5 cents per share final dividend, taking the payout for the year to 7.75 cents or 80 per cent of earnings before the baking division write-down. The previous year's payout was 10.75 cents per share or 92 per cent of profit.

Goodman Fielder shares initially fell 2 cents to 97 cents after the results were released but then recovered to 98 cents which is up from their 90 cent year low earlier this month. The shares have fallen from $2 in November last year.