Australian food firm Goodman Fielder said that thanks to better dialogue with its retail partners, agreed price increases across its bakery arm will help boost business further.
The company has invested heavily in strategies to reduce cost base and improve efficiency over the past few months in a bid to surface from its financial struggles.
In its full-year 2012 earnings Goodman Fielder recorded a 20% drop in operating profit and an overall A$147m ($153m) loss of earnings.
Chris Delaney, managing director of Goodman Fielder, said the firm is making continued progress on its dialogue with key retail partners in Australia and New Zealand.
“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,” Delaney said.
This has enabled agreed price increases to be implemented across the firm’s bakery category to reflect a ‘cost to serve’ model, he said.
In addition, he said the firm has reached agreement on the recovery of higher input costs in both the bakery and grocery businesses with retailers. “This is another important milestone in restoring more acceptable earnings, particularly in our bakery business.”
Bakery overhaul ‘on track’
The firm’s ‘Project Renaissance’ involving three bakery closures and the consolidation of operations under one ‘manufacturing hub’, is also on track.
The strategy commenced in June and aims to save A$100m ($103.9m) by 2015 and optimise manufacturing and supply chain operations across all its business arms.
“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,” Delaney said.