Goodman Fielder to sell or close 15 plants over three years

Australasian food company Goodman Fielder plans to sell or shut down around 15 factories across Australia and New Zealand over the next three years, as part of its efforts to generate A$100m ($102.56m) in savings.

During an investor briefing, chief executive Chris Delaney said that the company would reduce its manufacturing facilities from the current 53 plants to less than 35 plants by June 2015.

This reduction includes five facilities that will be divested as part of the company’s sale of Integro Foods and New Zealand Milling, and an additional three plants at Cairns and Rockhampton in Queensland, and South Clayton in Melbourne, whose closures were announced in June 2012.

The factory closures, which will primarily affect the bakery division, are expected to boost the company’s manufacturing capacity from 60% to 85%.

Goodman Fielder has also initiated a review of underperforming business and plans to divest them, a move that is expected to improve the company’s earnings margins.

The profitability of remaining businesses will be increased by eliminating underperforming product lines – the company has already cut nearly 150 lines from its Australian bakery division.

In August 2012, the company agreed to sell its Integro oils business to GrainCorp for A$170m ($174.36m) and is set to sell its New Zealand Milling business.

The latest move comes after Goodman Fielder reported a net loss of A$146.9m ($150.66m) for the 12 months to June 2012 – an improvement from a A$166.7m ($170.97m) loss in 2011.

The restructuring plan includes achieving sales growth by doubling marketing investment, of which 90% will be allocated to five product categories – bakery, dairy, flour and cake mix, spreads and dressings and mayonnaise.

Goodman Fielder also plans to expand its presence in the Asia-Pacific region, and to explore sales channels other than supermarkets such as the food service sector and hot bread shops.

Delaney noted that with this plan, the company expects to generate earnings per share growth of 6% by the end of the 2014-15 financial year, compared with an 8.3% per share in 2011-12.