Goodman Fielder will hike the prices of its bread products after high wheat prices hurt its bottom line in the first half of the financial year.
The maker of Helga’s and Wonder White will charge more for its bread after high wheat prices helped push the company to a $65 million half year loss.
Goodman Fielder, which also makes the Lawsons and Mighty Soft bread range, says it will increase its prices by the middle of 2014, though it isn’t saying by how much.
Chief executive Chris Delaney said the move was in response to persistently high Australian wheat prices.
Drought conditions in parts of Queensland and NSW helped push wheat prices around eight per cent higher during the six months to December 31.
“We’re putting those cost increases through in order to continue to maintain the margin we’ve worked so hard to get,” Mr Delaney said.
He said wheat prices were expected to remain high during the second half of the financial year.
“We would not push through a price increase to the trade if we thought it were a short term anomaly.”
Goodman Fielder, Australia’s largest food manufacturer, also pushed through two price increases on its New Zealand dairy products in response to record milk prices.
The higher milk and wheat prices, along with almost $95 million in costs from the sale of several businesses, and restructuring costs, resulted in Goodman Fielder’s loss.
Mr Delaney said the result was disappointing and overshadowed the company’s efforts to cut costs and streamline its operations.
The company has identified a further $25 million worth of potential savings, lifting its longer term target for savings of around $125 million by the end of the 2015/16 financial year.
“It takes a lot of work to save $25 million and then you see these one off issues steal it away,” Mr Delaney said.
But the company expects to improve its performance during the second half of 2013/14 and is forecasting a full year profit of around $186 million, roughly in line with its 2012/13 result.
Aside from its baking business, Goodman Fielder produces a wide range of food products including sauces, margarine spreads, baking ingredients and smallgoods.
Shares in Goodman Fielder were down five cents, or 7.4 per cent, at 63 cents at 1457 AEDT.