US food manufacturer Lancaster Colony has booked a drop in full-year profits.
In the 12 months to the end of June, earnings slid 9.9% to US$95.8m. Operating profits in the period dropped 2.5% to US$143.3m.
Lancaster's speciality foods unit recorded a 2.4% drop in operating profit to $151.5m amid higher commodity costs.
Sales, however, climbed 4% to reach $1.13bn thanks to a 7.2% increase in revenue from its speciality foods division.
Show the press release
Lancaster Colony Reports Fiscal Year and Fourth Quarter Results#
COLUMBUS, Ohio, Aug. 23, 2012 /PRNewswire/ -- Lancaster Colony Corporation (LANC) today reported results for the company's fiscal year ended June 30, 2012, including these highlights:
Net sales increased four percent to $1,131 million versus $1,090 million last year.
Net income totaled $95.8 million or $3.51 per diluted share, compared to the prior year's net income of $106.4 million, or $3.84 per diluted share. For fiscal 2012, results included pretax income of $2.7 million (approximately six cents per share after taxes) associated with a second quarter distribution under the Continued Dumping and Subsidy Offset Act (CDSOA). Fiscal 2011 results included pretax income of $14.4 million (approximately 34 cents per share after taxes) associated with CDSOA distributions in the second and fourth quarters.
The cash dividend was increased for the 49th consecutive year.
The balance sheet remained strong with no debt outstanding and over $191 million in cash and equivalents.
Fourth Quarter Results
Highlights of the fourth quarter ended June 30, 2012 included the following:
Net sales increased seven percent to $274 million versus $256 million in the year ago quarter.
Specialty Foods net sales set a fourth-quarter record of $248 million, up eight percent over the prior year's fourth quarter total. Both retail and foodservice sales posted increases, reflecting higher pricing, improved foodservice volume and lower trade and consumer-directed promotional costs. Higher pricing contributed over 2% of the sales growth. Retail sales were adversely affected by this year's early Easter, but benefited from recent product introductions. Segment operating income rose 23 percent to $42.0 million from $34.2 million a year ago primarily due to improved pricing, higher sales volumes and lower consumer-driven marketing and promotional costs. These costs declined by approximately 2% of segment net sales, due in part to various Easter programs falling in the third quarter. The above factors were partially offset by a less favorable sales mix and higher material costs, the increase of which approximated 2% of segment net sales. Fourth quarter income also included approximately $1 million in vendor recoveries associated with a fiscal 2010 product recall.
Glassware and Candles sales of $25.6 million were essentially even with year ago levels. The segment's quarterly operating loss of $0.2 million compared to a loss of $1.3 million a year ago. Results reflected an improved sales mix and modestly improved wax input costs.
Fourth quarter net income totaled $26.0 million, or $.95 per diluted share, versus the year ago net income of $29.3 million, or $1.07 per diluted share. The year ago results included a pretax CDSOA distribution of $13.4 million (approximately 33 cents per share after taxes).
Fiscal 2012 Commentary
Chairman and CEO John B. Gerlach, Jr. said, "We were pleased to conclude fiscal 2012 with solid fourth-quarter improvements in sales and operating income despite the year-long challenge of generally higher material costs. Throughout the year, Specialty Foods sales benefitted from our product innovation efforts across both retail and foodservice lines. New retail items helped our key product lines maintain or grow category shares. Similar to fiscal 2011, we were unable to offset the full material cost escalation through higher pricing. Glassware and Candles' reduced operating income reflected lower sales and higher wax costs, only partially mitigated by improved pricing and sales mix."
Fiscal 2013 Commentary
Mr. Gerlach added, "As we look at fiscal 2013, the key unknown in the current economic environment is how changes in future consumer sentiment will impact sales. Sales should continue to benefit from the rollout of new retail food products including Sister Schubert's® Sweet Hawaiian Rolls and Mini Loaves, New York brand® Hand-Tied Garlic Knots, and several varieties of Marzetti® Simply Dressed® & Light refrigerated salad dressings. We anticipate that Specialty Foods operating income may initially benefit from modestly higher pricing and from overall commodity costs beginning the year somewhat below year ago levels. In Glassware and Candles, we expect seasonal sales growth and higher production levels. We believe that the strength of our market positions, along with a solid and flexible balance sheet, leave us well positioned to support future growth."
Conference Call on the Web
The company's fiscal year and fourth quarter conference call is scheduled for this morning, August 23, at 10:00 a.m. ET. You may access the call through a live webcast by using the link provided on the company's Internet home page at www.lancastercolony.com. Replays of the webcast will be made available on the company website.
About the Company
Lancaster Colony Corporation is a diversified manufacturer and marketer of consumer products focusing primarily on specialty foods for the retail and foodservice markets.
