BIG trans-Tasman food business, Goodman Fielder, is poised to put its commercial vegetable oil business back on the market and is seriously considering selling its flour mills in New Zealand.
The diverse food company is also exploring the prospect of releasing preservative-free bread lines with up to 10 days' supermarket shelf life as part of a major cost shaving program aimed at lifting operating efficiency by $100 million within four years.
Last year Goodman Fielder's attempt to sell its bulk fats and oil business supplying commercial kitchens, fast food outlets and manufacturers was blocked by the Australian Consumer and Competition Commission (ACCC) after a $240 million offer bid from Cargill.
Unsolicited offers have been made by others in the edible oil industry since the Cargill sale was canned.
A newly initiated business review, triggered by Goodman Fielder's $166.7m loss last financial year, has identified at least $100m in potential ongoing savings, of which $40m have already been "actioned" according to chief executive officer, Chris Delaney.
A vegetable oil plant at Bunbury in Western Australia and the Quality Bakers plant at Rotorua in NZ have just been earmarked to close within six months.
Goodman Fielder's Champion Flour Mills in NZ at Christchurch and Mt Maunganui, south of Aukland are also sale candidates, or may included in a joint venture partnership with another food business.
Other food products in the company's massive portfolio, including biscuits, smallgoods and chilled meals, could also be sold if the review finds their contribution or growth prospects unlikely to be central to the business' recovery.
Goodman's struggling performance over several years has seen its share price slide notably in the past 12 months - down around $1 to 53 cents this week.
GrainCorp's Allied Mills, which bought all of Goodman Fielder's Australian flour mills in 2002 (in a 60-40 partnership with Cargill), acknowledged it enjoyed good relations with Goodman, but was not hinting at snapping up any sale prospects, yet.
Allied has long term contracts to supply Goodman Fielder with its considerable flour needs.
Managing director, Joe Di Leo, said any definite decision to offload the NZ mills or other food operations was still in Goodman Fielders' hands.
"We have a good relationship with Goodman Fielder and are always happy to talk. We've been watching the developments," he said.
NZ is a solid market for Allied's exports of flour and pre-mixed bakery lines, but the miller does not own processing operations across the Tasman.
Goodman Fielder corporate affairs director, Ian Greenshields, said any asset or brand sales would not include the company's well known retail vegetable oil and margarine lines such as Meadow Lea, Crisco, Logicol, Eta and Gold'N Canola.
However, the company was frequently reviewing its big baking business costs and some categories may be identified as needing specific attention on costs.
Among the significant costs for its bread division was transport and supermarket shelf restocking, which may be pruned back by adopting strategies to reduce the number of deliveries and bread recovery visits to stores.
Bread sold in Europe typically has a 10-day shelf life, but in Australia the major bakeries tend to operate at least a daily delivery schedule, reclaiming their unsold product.
Loaves which have passed their use-by date are returned and re-processed into other food lines, including bread crumbs, or used in stock feeds.
Goodman, which has 16 different bread brands from Wonder White to Lawsons and La Famiglia, is looking at European and North American trends in bread baking and new packaging ideas as a possible pointer for cost control centred on new deliveries possibly being only once every two to three days.
"We don't use preservatives and wouldn't be resorting to them, but we are looking at the technology overseas and considering if it would be applicable to our climate and distribution distances," Mr Greenshields said.
"We won't risk sacrificing the taste or quality of our products, butwhat we are learning from Europe may be applicable here given our transport cost is a significant contributor to our cost base.
Mr Greenshields said it was not clear how long the wide ranging cost option review would take and there were no deadlines for specific projects, or even a compulsion to sell any brands or assets.
But, CEO Mr Delaney said the company believed its retail business portfolio was a priority and therefore its milling and oils business, "although attractive and well performing, is non-core".
"Other businesses are also under review to evaluate their strategic fit with our portfolio," he said.
The company wanted to extract a further $25m in the 2013 and 2014 - largely by redesigning its bread supply chain, which accounted for 43 per cent of costs - with a further $35m trimmed by 2015.
In NZ three retail divisions were being consolidated under one management team to lift efficiency and a similar business model may be adopted in Australia once the benefits were analysed.
