Closing Rotorua plant grist to Goodman mill

Goodman Fielder is the largest consumer food supplier in New Zealand with sales of about $1.1 billion. Photo / Thinkstock

Transtasman food giant Goodman Fielder plans to close its Rotorua plant as part of measures to achieve ongoing cost savings of A$100 million ($131.5 million) over the next four years.

A Goodman Fielder spokesman said the Rotorua Quality Bakers plant employed 40 staff.

The company was currently in a "consultation phase" with the workers, and relocations to other facilities as well as redundancies were possible if the factory closure went ahead, he said

Managing director Chris Delaney, who joined Goodman Fielder on July 4 and immediately instituted a strategic review, said: "Work plans are in place to deliver a further A$25 million [above A$40 million already actioned] in financial years 2013 and 2014, with A$35 million to be targeted for delivery in financial years 2014 and 2015.

"These savings will be used to reinvest in the business and improve the company's bottom line.

"We've determined that our retail businesses are our portfolio priority and therefore our commercial milling and oils businesses, although attractive and well-performing, are considered to be non-core."

Delaney said the company was exploring options for those businesses which would maximise shareholder value, including selling them or forming joint ventures. The strategic fit of several other businesses within the group was still being evaluated.

The company didn't provide separate results for the milling or retail businesses in its latest annual report but operating profit from its Integro edible fats and oils business jumped 44 per cent to A$40.3 million in the year ended June 30.

Until now, the company has been divided into baking, home ingredients, Integro, dairy and Asia-Pacific divisions.

Delaney said the company had consolidated its three retail divisions in New Zealand into one integrated team and work was well advanced on analysing the benefits of a similar move in Australia.

"Our manufacturing and supply chain will be optimised and work is advancing on the development of a new baking business model with potential efficiencies and cost savings already identified," he said.

The baking division's operating profit fell 21 per cent to A$130.5 million in the latest year and the company wrote down its value by A$300 million.

"The strategic review also identified the opportunity to consolidate our manufacturing base in Integro and baking and eliminate unused capacity through proposed plant closures in Bunbury, Western Australia and in Rotorua, New Zealand," he said.

The business was beginning to stabilise thanks to the strengthening of the funda-mentals in baking and the impact of cost savings programmes, despite the external environment remaining challenging.

"We can provide no specific guidance due to the volatility that exists in the market and because our recovery plans are still at an early stage.

"I believe in the last four months we've made good progress in setting the foundations for turning around the company's performance. However, we're still a long way from where we need to be."

Goodman reported a A$166.7 million bottom line net loss for the year to June 30.