Shares in Goodman Fielder plunged almost 20 per cent after the breads and spreads maker lowered its profit expectations for the year.

The company says it will take a $300 million impairment charge on its baking division in its 2010/11 financial results.

“As a result of the weak trading in the baking division in Australia and New Zealand, the directors of Goodman Fielder have approved a non-cash impairment charge of $300 million, which will be taken in the 2011 accounts,” it said in a statement on Friday.

Furthermore, net profit for 2010/11 was expected now to be “slightly below” guidance given in April of $140 million to $150 million.

Goodman Fielder said despite the company’s belief at the end of April that the fourth quarter of the financial year would be an improvement upon the third quarter, trading had remained subdued due to continued unfavourable external and market conditions.

Action to restore profitability had been partially successful, but was inadequate to restore profitability to an acceptable level.

“Management underestimated the impact of these changed conditions and, therefore, the company’s initial response was inadequate,” Goodman Fielder said.

Goodman Fielder said new chief executive Chris Delaney had initiated a strategic review of operations aimed at improving the company’s performance.

A review update will be provided at the release of the company’s 2010/11 results on August 29.

Goodman Fielder shares were 19 cents, or 19.79 per cent, lower at 77 cents on Friday.