Bread maker brings in the dough

Goodman Fielder returns to profit. But can it last?

a woman

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

After a few years in the corporate wilderness, the bread-to-spreads maker Goodman Fielder (ASX: GFF) has today reported a better-than-consensus profit result as it returns to profit.

Encouragingly for shareholders, too, the company has reinstated its dividend, with a 3 cent per share payout being declared.

Higher bread and milk prices helped the company post an $86.5 million normalised profit, but Goodman Fielder remained cautious about the company's outlook highlighting pressure on both its product margins and growth in the volume of products sold.

Importantly for the company's long-term future, debt has been significantly reduced, and its interest cover has been improved. Additionally, its cost reduction program, Project Renaissance has delivered annualised savings of $65m thus far, with the company saying it remains on track for $100m of annualised savings by the end of its 2015 financial year.

Of course, being a supplier to the grocery triumvirate of Woolworths (ASX: WOW), Wesfarmers' (ASX: WES) Coles and Metcash (ASX: MTS) –supplied IGA stores isn't easy. The retailers continue to look to suppliers to help fund lower prices – and when you produce 'bread and butter' products like, well, bread and butter as Goodman Fielder does, it's tough to maintain and grow your margins.

Still, long suffering shareholders can at least enjoy their day in the sun – and the dividend cheque in the bank accounts. It remains to be seen whether this is a genuine change in fortunes, or a high point in a tough business cycle.

Interested in our #1 dividend-paying stock? Discover The Motley Fool's favourite income idea for 2013-2014 in our brand-new, FREE research report, including a full investment analysis! Simply click here for your FREE copy of "The Motley Fool's Top Dividend Stock for 2013-2014."

More reading

Motley Fool advisor Scott Phillips owns shares in Woolworths.

More on ⏸️ Investing

Close up of baby looking puzzled
Retail Shares

What has happened to the Baby Bunting (ASX:BBN) share price this year?

It's been a volatile year so far for the Aussie nursery retailer. We take a closer look

Read more »

woman holds sign saying 'we need change' at climate change protest
ETFs

3 ASX ETFs that invest in companies fighting climate change

If you want to shift some of your investments into more ethical companies, exchange-traded funds can offer a good option

Read more »

a jewellery store attendant stands at a cabinet displaying opulent necklaces and earrings featuring diamonds and precious stones.
⏸️ Investing

The Michael Hill (ASX: MHJ) share price poised for growth

Investors will be keeping an eye on the Michael Hill International Limited (ASX: MHJ) share price today. The keen interest…

Read more »

ASX shares buy unstoppable asx share price represented by man in superman cape pointing skyward
⏸️ Investing

The Atomos (ASX:AMS) share price is up 15% in a week

The Atomos (ASX: AMS) share price has surged 15% this week. Let's look at what's ahead as the company build…

Read more »

Two people in suits arm wrestle on a black and white chess board.
Retail Shares

How does the Temple & Webster (ASX:TPW) share price stack up against Nick Scali (ASX:NCK)?

How does the Temple & Webster (ASX: TPW) share price stack up against rival furniture retailer Nick Scali Limited (ASX:…

Read more »

A medical researcher works on a bichip, indicating share price movement in ASX tech companies
Healthcare Shares

The Aroa (ASX:ARX) share price has surged 60% since its IPO

The Aroa (ASX:ARX) share price has surged 60% since the Polynovo (ASX: PNV) competitor listed on the ASX in July.…

Read more »

asx investor daydreaming about US shares
⏸️ How to Invest

How to buy US shares from Australia right now

If you have been wondering how to buy US shares from Australia to gain exposure from the highly topical market,…

Read more »

⏸️ Investing

Why Fox (NASDAQ:FOX) might hurt News Corp (ASX:NWS) shareholders

News Corporation (ASX: NWS) might be facing some existential threats from its American cousins over the riots on 6 January

Read more »