Diversified food manufacturer Goodman Fielder Ltd (ASX: GFF) has spooked investors with the release of its half-yearly results. While normalised revenue grew by 5%, normalised profit dropped 9% and earnings per share fell 12% on the prior corresponding period (pcp).
The company had previously notified the market of challenging business conditions so the results shouldn't have come as a surprise, however it hasn't stopped shareholders offloading the stock after the results release. By 11am over 2.8 million shares had changed hands with the stock hovering around the 62 cent mark, which is just 1 cent above its 52-week low.
The results presentation did however contain three positives for investors. Firstly, the declaration of a 1 cent unfranked dividend – an improvement on the pcp when no dividend was paid. Secondly, management's Strategic Plan is beginning to gain traction and deliver top line growth – although this was overshadowed by cost inflation during the half. Thirdly, the company expects a significant earnings improvement in the second half over the first half.
Foolish takeaway
In January distinguished fund manager Maple-Brown Abbott announced it had sold down its holding below the 5% substantial shareholder threshold, however much of the fund's selling occurred during 2013 at higher prices. With the stock at its low and guidance for normalised EBIT in FY 2014 of around $185.6 million, investors may be better off hanging on to their holding and waiting for the turnaround.
