Goodman Fielder faces tough times: chairman

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Food manufacturer Goodman Fielder "continues to confront commodity cost pressures and significant price volatility," according to chairman Max Ould.

"The challenge for us is to ensure that we recover these increases in the marketplace," Ould said in a letter to shareholders.

"This will be even more difficult, given the extreme level of competition and price discounting that is presently occurring in the retail sector."

Ould said the strong Australian dollar will continue to depress earnings from outside Australia.

In the six months ended December 31, Goodman Fielder's earnings before interest, tax, depreciation and amortisation increased more than 10 per cent and net profit was up just over 3 pe cent, which was "satisfactory in a very difficult trading environment," he said.

Earnings from New Zealand and Asia Pacific were hit by the strong Australian dollar.

Ould said the company's net debt is now below A$900 million, which he considers is appropriate to the business, and Goodman Fielder has extended its debt maturity profile to four years from 1.6 years.

Chief executive Peter Margin wishes to leave the company by the end of April.

The board is currently looking for a replacement and hopes to be able to make an announcement soon.

However, "if there is a gap between Peter's departure and the arrival of his successor, I will manage the company as executive chairman during the interval," Ould said.

Goodman Fielder is also looking for a new chief financial officer after David Goldsmith left the company on February 23.

Neil Kearney, formerly chief financial officer at National Foods, is filling that vacancy temporarily.

In a report late last month, analyst David Walker at Aegis Equities, which is owned by Morningstar, described Goodman Fielder as: "Leaderless in tough times.

We are concerned GFF might find it difficult to attract a strong external candidate given the many challenges Peter Margin faced in his five years," Walker said.

"Over the same period, every division also had more than one managing director, perhaps another indicator of how hard it can be to succeed at this company.

"Also, a permanent chief financial officer cannot be appointed until a new chief executive starts. The timing of the turnover and the loss of a well-regarded CEO are not good for sentiment, given current tough trading conditions."

Goodman Fielder shares rose 0.6 per cent to $1.65, down from the year's peak at $2 last November but above last month's $1.45 low.