Goodman details its recipe for revamping

By DITA DE BONI

Transtasman food concern Goodman Fielder has revealed more details of its long-awaited strategic restructuring plan, designed to slash $A50 million ($60.9 million) in costs each year for the next three years.

Plans include the integration of the company's three major New Zealand retail businesses - Milling and Baking, Bluebird and Meadow Lea - into a single entity under a single managing director, former Bluebird head Ron Vela. The businesses generate around $A553 million in sales annually.

Some New Zealand head office jobs could be lost when the management of the businesses merge, group managing director Doug McKay said on Friday.

Milling in both Australia and New Zealand would be run "hard for cash," having been streamlined last year.

Two Australian operations - snack-food producer Uncle Tobys and edible-oils division Meadow Lea - will also meld.

Milling and Baking will be split and run separately, leading some market analysts to speculate that low-yielding milling will be sold at some stage.

Goodman management denies that it wants to offload Milling, but says the commodity end of the business will not be a focus in the future.

While the findings of the strategic review have been eagerly anticipated, the company also revealed a dip in sales and profits for the first half of the 2000-01 year, disappointing analysts and shareholders after a promising 12-month result last year.

First half-year results show sales dropped 4.6 per cent to $A1.5 billion, while profit fell 23 per cent to $A37.5 million.

The profit result includes abnormals of $A30.2 million attributed to restructuring costs, but still comes in slightly below analysts' forecasts of $A59 million.

In the same period last year, the company reported $A67.9 million in net profit, a result bolstered by a $7 million tax break.

On Friday, Australian analysts and institutional shareholders expressed frustration at Goodman's perennial restructuring and its languishing share price.

Ahead of the half-year result announcement, Goodman shares traded at an 18-month high of $A1.49, but dropped to $A1.39 after the results were tabled.

Criticism that the company over-promises did not deter chairman Jon Peterson, who said that Goodman Fielder would deliver a "record second half," with 5 per cent earnings growth.

He said the company's focus was now on its retail brands and the action plan would deliver "significantly improved performance over the next three years."