Australian bakery and grocery firm Goodman Fielder has struck a “milestone” agreement with retailers on prices and input cost recovery.
Chris Delaney, Goodman Fielder’s managing director said the company would deliver “more acceptable earnings” after agreeing a ‘cost to serve’ model with Australia and New Zealand retailers – a move which will raise prices across its bakery portfolio. In addition, Australia’s leading retailers such as Woolworth’s and Coles have agreed to Goodman Fielder setting more favourable terms on input cost recoupment.
“We have worked hard to deliver an improved level of alignment and engagement with our retail partners, particularly in their recognition of the costs involved in Goodman Fielder continuing to reliably supply fresh bread to destinations around Australia,” said Delaney.
“This is another important milestone in restoring more acceptable earnings, particularly in our Bakery business.”
The agreement is part of Goodman Fielder’s ‘Project Renaissance’ 2015 strategy – a $100 million cost reduction programme targeted at achieving operational efficiencies and enabling the company to refocus its investment on its core categories.
“Our identified cost savings through Project Renaissance are proceeding as planned and we are also well advanced on key internal projects to improve our operational effectiveness,” added Delaney.
Delaney added that the firm would seek innovations across its core branded portfolio this year and work to identify new revenue streams outside of supermarket channels, such as artisan bread and food service channels. The firm is also targeting growth in Asia.
“While trading conditions continue to be highly competitive, I am confident that the progress we have made in establishing a more sustainable earnings base, together with a stronger balance sheet, will mean our competitive position will continue to improve,” concluded Delaney.
