Higher costs along with a hefty $170 million write-down in goodwill on the firm's New Zealand dairy operations all took a toll on its 2007/08 result.
Net profit for the year to June 30 was $27.7 million, down from $239.8 million in 2007.
Its normalised net profit - excluding restructuring costs, the goodwill writedown and currency effects - was little changed at $220.7 million, from to $218.7 million.
"The company sees little improvement in the underlying earnings in fiscal 2009 due to uncertainty around commodity costs and future economic conditions in Australia and New Zealand," the company said.
"The company is more optimistic for the fiscal 2010 year and expects to see the benefits flow through from significant capital expenditure and resulting efficiency gains, combined with softening commodity prices."
During 2007/08, Goodman absorbed $234 million in higher commodity and logistic costs as the price of oil and milk rose.
As well, a rapid deterioration in the New Zealand economy toward the end of the financial year affected earnings along with the weakening New Zealand dollar.
Goodman stock fell 3.97 per cent, or six cents, to end at $1.45.
As part of its push to reduce costs and become more efficient, the company closed a Victorian bakery and a NSW oils factory during the year.
Managing director Peter Margin said another two bakeries in Brisbane would be closed soon while a new facility would be established south of Brisbane.
The company has closed seven or eight factories in the last few years, Margin said, although he would not say how many jobs would be lost in Brisbane.
"This quarter, we will take another 200 employees out of our business," he said.
"Over the next 12 months, over and above that, we will probably take out another 150 to 200 employees."
The breads, spreads and dairy products processor has around 8,000 employees in its Australian, Asian and Pacific operations.
On a brighter note, Margin said he expected some softening through 2009 in each of the main commodities the manufacturer uses - wheat, oil and dairy.
As well, revenue was up more than 10 per cent to $2.68 billion despite competition from so-called "house brand" products offered in supermarkets.
Although Goodman won or retained a number of house brand contracts during the year, its profit margins were being squeezed, Margin said.
"What you are seeing, however, are some shifts in the types of products that consumers are buying," he said.
"Indeed there has been a continuing migration to house brand products whether it be bread or milk or these types of related staples.
"That will continue at least in the short term, certainly with a softening economy here and what many analysts are probably calling a recessionary economy more in New Zealand."
To combat that drift to cheaper products, Goodman bumped up its product innovation and increased its advertising budget by 60 per cent in 2008.
Earnings before interest and tax (EBIT) for Goodman's fresh baking business fell 12.9 per cent to $131.4 million - the first time in the last five years in which the business did not record double digit profit growth.
Earnings for its commercial unit, which supplies flour, fats and oils, fell 4.6 per cent to $66 million, due to rising oil and wheat costs.
But home ingredients EBIT rose 13.8 per cent to $101.3 million after the inclusion of the first full year of earnings from its Copperpot dips business as well as a few months benefit from biscuit maker Paradise Foods, which it acquired in March.
Meanwhile, EBIT for the troubled dairy and meats arm fell 31.9 per cent to $34.4 million, after raw milk costs increased by over 60 per cent in the year.
Goodman tried to claw that back with four price rises but the timing lags and a growth in private label sales had a negative impact on margins, it said.
Goodman declared a final dividend of 7.5 cents, 40 per cent franked, taking the total for the year to 13.5 cents - a similar amount to the payout in 2007.
