Shares Drop for Goodman After Profit Cut

Goodman Fielder (ASX:GFF) shares plummeted more than 9 percent to $1.055 after the company made a surprise announcement yesterday to downgrade profit to 20 percent for the year. This is the company's lowest drop since April 2009. Wednesday saw shares drop by more than 3 percent on a 40 percent turnover spike.

The impact of the higher dollar, high food prices, discounting and poor product placement were cited by the food manufacturer as the source of the downgrade. A full-year profit of $140 million to $150m is now expected to be announced by the company. An earlier forecast was "in line with the prior year's normalised earnings of about $183m."

Max Gould, Goodman chair, said "Timely cost recovery in our Australian baking and home ingredients businesses has proved to be very difficult to achieve in the current climate of fierce retailer competition." Goodman had to deal with "retailer resistance" after it asserted higher shelf prices during the third quarter.

A better fourth quarter was expected by Goodman due to price increases being achieved, but said this would not cover the previous grinds.

Shares closed at $1.05, down 9.05 percent, or 10.5c.