Tuesday, August 28, 2007

2007 Full Year Profit: Goodman Fielder Pie Gets Bigger

Goodman Fielder Ltd [GFF.NZX] the Australasian food company, has announced a solid profit for Full Year 2007. Net profit on a pro-forma basis, to include a full 12 months performance, was $243.2 million, up 23 per cent on 2006.

Revenue was up 2% to slightly over AU$ 2.4 Billion with strong contributions from Australia but flat input from New Zealand.

During the year Goodman added multiple brands to its stable of everyday home staples that include: Vogel's Bread, Kiwi Bacon, Irvine's Baked Goods and Tararua Dairy products. GFF note that they have integrated the companies that they have bought well and are poised to get good growth from these acquisitions.

Goodman Fielder's Brands set the company apart in this part of the world. They dominate many aspects of the food staples families use everyday, especially breakfast. It is comparable to Kraft, the US food conglomerate, in this respect.

The share price has appreciated markedly over the past few weeks as investors seem to be rushing towards so-called "safe havens" in this time of market turmoil. GFF was dual listed on New Zealand's NZX and Australia's ASX at the end of 2005 at AU$2 a share and has traded consistently on the NZ exchange at a range of NZ$2.10 to just over $3.

A slow but unspectacular growth story with solid revenues wont see much of an increase in share price but there has been recent talk of Australia's Coca Cola Amital being interested in buying the company for its broad range of brands that would compliment some of the strong brands that Coke manages.

The interest of Asian business in Australian food groups is another good reason to hold onto those GFF shares. Apparently those in the food business in Asia see this region as some sort of food holy grail:

What's going on? "A lot of Asian tycoons are seeking to take strategic positions in an area they think will be the next money spinner," says Richard Beaurepaire, head of research at consultancy Bain & Co. in Sydney. "They understand that food will become a scarce resource in Asia over the next few years as the land and water to support the region's 3 billion or so increasingly prosperous, urbanized people are not there." Australia, which likes to style itself as the Supermarket of Asia, produces abundant food that can be shipped fast to its neighbors.(asiaweek.com)

I like Goodman Fielder for the loyalty of customers for the brands that it sells. More often than not this loyalty can last a lifetime and can get passed on through generations making owning a such a company a good lifetime bet.

Goodman Fielder shares were up 3c today at NZ$2.95.

Disclosure: I own GFF shares.

Goodman Fielder @ Share Investor

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Goodman Fielder Financials

Related Amazon Reading

Hungry Corporations: Transnational Biotech Companies Colonise the Food Chain

Hungry Corporations: Transnational Biotech Companies Colonise the Food Chain by Helena Paul
Buy new: $34.95 / Used from: $29.40
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c Share Investor 2007

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