Goodman Fielder will ramp up its direct marketing spend in 2014 in order to boost earnings as it continues to face tough trading conditions in its Australian baking and NZ dairy businesses.
In an update on trading conditions at its annual general meeting, the company said that though average shelf prices in baking in Australia had increased since June, the market was “still experiencing aggressive promotional pricing in fresh loaf, particularly at the premium end of the segment”.
Margins in its New Zealand dairy business also remained under pressure in the second half, according to the company, due to rapidly rising farmgate milk prices – 40 per cent since the fourth quarter of the 2013 financial year – and aggressive competitor pricing.
“While those conditions have remained essentially unchanged, further increases in commodity prices have continued to impact our New Zealand diary business in the first half,” said Goodman Fielder MD, Chris Delaney.
The company said a key priority in the 2014 financial year was to strengthen the equity across its core branded portfolio through innovation and increased investment in research and development and direct marketing expenditure (DME).
“As a result, investment in DME in the first half of FY14 is expected to increase by around 100 per cent compared to the second half of last year to support marketing and advertising campaigns in baking, dairy and grocery,” the company said.
Goodman Fielder said it expected the benefits of that increased investment would ultimately result in earnings growth.
Goodman Fielder has also been ordered to pay out more than $36,063 after one if its NZ worker's hands was badly damaged in a bakery accident when he stumbled and caught his hand between two rollers.
Goodman Fielder says the Australian baking segment is experiencing aggressive promotional pricing particularly at the premium end.
