Goodman Fielder turning on the DRIP

Dividend Re-investment Plans or DRIPs are a way for a company to distribute profits to shareholders by allowing them to get shares in lieu of cash.

In the normal state of affairs when the economy is in a healthy state it is a good way to keep cash flow in the company to help run the day to day machinations of your company.

Many listed NZX companies have DRIP plans.

Goodman Fielder Ltd [GFF.NZ] has taken that opportunity today by issuing a DRIP offer to its shareholders.

One other company in the Share Investor Portfolio has a DRIP plan and that is Sky City Entertainment. [SKC.NZ] Its DRIP has been running for several years and was instituted at a time when the company found itself with a little cash flow problem due to poor management leading to a couple of awful profit results.

With Goodman Fielder issuing their DRIP intentions I wonder out loud as to whether a cash flow problem might be influencing their decision to make a DRIP available.

Several NZX companies are currently making plans to improve cash flow.

Fletcher Building Ltd [FBU.NZ] signalled the sale and leaseback of their Penrose head office this week and issued millions of dollars of capital notes while Fisher & Paykel Appliances[FPA.NZ] indicated yesterday that they are looking at a capital raising.

Many other companies have issued debt and others are now planning to to get themselves through the current economic crises through prudent and some imprudent means.

Freightways Ltd [FRE.NZ] cut their dividend for example even though their 2009 half-year profit rose slightly.

Goodman's DRIP is a good move to help during these hard times but nevertheless it does leave me with a slightly uneasy feeling.

* Disclosure: I own GFF, SKC, FRE, FBU shares.


Goodman Fielder @ Share Investor

Goodman Fielder to improve bottom line in 2009
Why did you buy that stock? Goodman Fielder
Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger


Goodman Fielder Financials

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon Reading



The Ultimate Dividend Playbook: Income, Insight and Independence for Today's Investor by Morningstar Inc.
Buy new: $16.47 / Used from: $12.95
Usually ships in 24 hours


c Share Investor 2009

Goodman Fielder to improve bottom line in 2009

Discuss Goodman Fielder at Share Investor Forum


The commodities bubble has burst in my opinion, something that I commented on a couple of months ago.

While it might be bad for those investors who recently bought into that booming sector-I know a couple of people currently being advised by brokers to buy BHP Billiton [BHP. AX] and Rio Tinto [RIO.AX]-there are benefits for investors in other sectors.

Staple consumer stocks like Kraft[KFT.NYSE] , Mars-Wrigley, Coca Cola [KO.NYSE] and Australasia's listed Goodman Fielder [GFF.NZX] food group will reap massive rewards in bottom line profit.

Dropping corn prices will benefit Coca Cola, Mars-Wrigley and many other consumer stocks who use the corn syrup made from corn as a base for many of their sweet to taste products.

Input costs of raw materials ranging from raw food costs, to packaging and transport have all dropped by an average of 15% on US commodities exchanges and this is clearly good for business.

Goodman Fielder for example has been suffering badly from high commodity prices over the last year, wheat especially having a big impact on bread prices. It even had to go to the extent of writing down the value of its New Zealand Dairy assets because of the deteriorating economy.

The price of wheat has declined 40 percent from a record $13.495 a bushel in February to $9.0925 a bushel as of yesterday.



The lower costs of commodities like wheat to food manufacturers mean more black ink to the bottom line, as companies are reluctant to pass on production savings to consumers.


In the 2 months to August 6 the US wheat production was up almost 20% from this time last year.

Corn crops previously thought to be savaged by floods in the US Midwest are now on track to deliver near record cropping.

You may have noticed Goodman Fielder branded breads in supermarkets haven't had their prices cut since the raw wheat price drops and none of their other wheat based or corn based products have taken a price hit.

All this means Goodman are very well placed to increase profit substantially in the 2009 year as their large range of branded and packaged consumer food products will have their input costs into production substantially cut.

As food manufacturers passed on costs when commodities were rising it is unlikely that they will cut as commodity prices slump.

Bad for consumers, but very good for investors in consumer stocks.

Disclosure - I own GFF Shares

Goodman Fielder @ Share Investor

Goodman Fielder turning on the DRIP
Commodities bubble set to burst
Why did you buy that stock? Goodman Fielder
Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger

Related Links

Kraft good in a recession -Everything Warren Buffett
Goodman Fielder - Corporate Website
Cbot.com - Commodity prices

Goodman Fielder Financials

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon Reading



The Food & Beverage Industry: Industry Leaders from Wise Foods, The Dannon Company, Inc., Samuel Adams & More on Manufacturing, Marketing and Distributing ... Sell (Inside The Minds) (Inside the Minds)
Buy new: $27.95
Usually ships in 24 hours


c Share Investor 2008

Why did you buy that stock ? [Goodman Fielder]

To be honest I bought Goodman Fielder[GFF] because I noticed just about everything I shoved in my fat mouth was made by the company.

Everything from Vogel's bread, Olivani olive spread Tararua milk and cheese products and a whole range of food for breakfast lunch and dinner.

I thought before buying, that this company has a huge clutch of branded, staple, food products that New Zealanders and Australians have grown up with and people simply keep buying them!

What more could you want from a business?

That is pretty much the the main reason why I bought the company. Goodman's dominant brands give it the "economic moat" advantage that Warren Buffett talks incessantly about and the fact that the company, what it sells and how it functions, is very easy to understand, puts it above other more complicated industries, whose balance sheets are only decipherable by specialist forensic accountants with xray vision.


Why did you buy that stock?

Why did you buy that stock? [Kiwi Income Property Trust]
Why did you buy that stock? [Hallenstein Glasson]
Why did you buy that stock? [Briscoe Group]
Why did you buy that stock? [Fisher & Paykel Healthcare]
Why did you buy that stock? [Pumpkin Patch Ltd]
Why did you buy that stock? [Ryman Healthcare]
Why did you buy that stock? [Michael Hill International]
Why did you buy that stock? [Mainfreight]
Why did you buy that stock? [The Warehouse]
Why did you buy that stock? [Goodman Fielder]
Why did you buy that stock? [Auckland Airport]
Why did you buy that stock? [Sky City Entertainment]

Discuss Goodman Fielder at Share Investor Forum


Goodman's competitive advantage over its competition lies in its ability to leverage off those strong brands, excel during good economic times and plod boringly through the tough years, as we are having now-we all have to eat and that will never change.

Going back to Buffett again, he has a massive holding in Kraft Foods[KFT], a company similar in its branded food focus to Goodman Fielder, but alot bigger of course and he has been adding to his holding over the last year as the stock price tumbles.

Would I buy the stock again today? of course, I still hold it and have done for around 4 years and have been adding to my portfolio over the last few months.

The only crimp for the short to medium term are commodity prices like wheat and raw dairy ingredients, which add to retail product cost but are not always able to be passed on to the consumer.


Related Share Investor reading

Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger


Related reading

Kraft good in a recession -Everything Warren Buffett
Goodman Fielder - Corporate Website


c Share Investor 2008

Goodman Fielder a hedge against an economic slump

Consumers still eat, even during economic downturns. Goodman Fielder is well
placed to weather the storm.



A stock likely to do well over an economic slump, a slump looking more likely than not, is the Australasian food giant Goodman Fielder (GFF).

With operations in Australia, New Zealand and throughout the Pacific Islands, Goodman has a business with food staples such as bread, milk, butter, flour, and highly branded packaged and processed foods for breakfast, lunch and dinner, and the snacks in between.



Wonder White, a strong
Australian brand.


Consumers are loyal to their brands and tend to stay true even when prices rise. Having said that there have been some large price increases of their products on the retail floor because of higher commodity prices, like wheat and sugar and increased labour, packaging and energy costs.

Unlike other companies, in less consumer essential businesses, Goodman Fielder has been able to pass on much of their increased business costs, so margins havent been affected on the downside too much.

Margins have been under pressure though and prospective buyers must be aware of this caveat.

Goodman does have competition, although Goodman does tend to dominate allot of food staples and brands: Vogels bread, Tararua, Kiwi, Edmonds, Meadowlea, Quality bakers, Irvines, anchor and a whole host of other recognised brands.

Goodman's share price has suffered of late, down to a low of NZ$ 1.78 last week from a high of $3.20 at the end of last year and finishing up 3c at $1.93 today.


Related Share Investor reading

Contact Energy looks bright during dark times
Goodman Fielder 2007 full year profit

Disclosure: I own GFF shares


C Share Investor 2008

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

Goodman Fielder to improve bottom line in 2009
Why did you buy that stock? Goodman Fielder
Goodman Fielder hit by high commodity prices
Goodman Fielder a Hedge against an economic slump
Goodman Fielder pie gets bigger


Goodman Fielder Financials

• Summary
• Charts
• Dividends
• News
• Announcements
• Price History
• Related Securities

Related Amazon Reading



Hungry Corporations: Transnational Biotech Companies Colonise the Food Chain by Helena Paul
Buy new: $34.95 / Used from: $29.40
Usually ships in 11 to 14 days


c Share Investor 2007