Goodman Fielder Ltd (GFF)
Sub-Sector: Manufacturer
Induction into AAG Agri-Index: 3rd July 2006
Last Updated 2nd February 2009
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Overview:
Goodman Fielder manufactures and supplies various food products, operating in Australia and New Zealand. These products consist of dairy goods, spreads and oils, edible fats and baked products.
Performance:
Goodman Fielder has taken a wild ride down a similar path to that of the All Ordinaries since its listing on the ASX in late 2005. It has copped the full brunt of an equities downturn where it has fallen from its high of $2.58 in September 07 to a low of $1.05 in December 08. However recent trading since has seen Goodman Fielder find clear water, having risen by 52% over the last few weeks to $1.60 to outperform the All Ords. In its overall trading since its incorporation into the AAG Agri-Index in July 06, Goodman Fielder’s share price has decreased just over 23%.
Recent Trading:
Goodman Fielder’s dairy business has been the centre of attention. Last year on the back of record high commodity prices (in particular raw milk costs), dairy earnings fell 32 percent while total revenue for the company rose 19 percent.
Competition in the dairy market has been surging, with GFF’s main competitor Fonterra dominating domestic sales. To add to concerns, Fonterra is its only supplier and major competitor. Analysts at Citigroup have said the dairy division has underperformed since it was acquired in December 2005 with profitability halved and an A$170 million write-down necessary.
Recent speculation that Italian company Parmalat looking to bid for Goodman Fielder’s dairy division has been a major catalyst for the price reaction from the market (a 52% increase over recent weeks). A sale would potentially bring in more than A$500 million for Goodman Fielder to focus on its more profitable sectors.
Chart. 1st January 2008 to 27th January 2009
