US baker Flowers Foods has changed its forecast for annual earnings, pointing to "heightened" competition and "challenging" trading conditions.
Flowers expects adjusted earnings per share to increase by 3.5% to 8% in 2012, including the contribution from its recent acquisition of regional rival of Lepage Bakeries.
The Lepage acquisition was sealed in July. In May, Flowers had given investors guidance its adjusted EPS would rise 3.5-8% but said the forecast did not include future acquisitions.
Without the impact of the Lepage deal, Flowers now expects EPS to be "flat to slightly up".
Flowers said yesterday (14 August) its new forecast "takes into consideration the heightened marketplace competitiveness and overall challenging business environment".
Shares in Flowers closed down 4.26% at $19.99.
The changes to Flowers' financial forecasts came as it reported its first-half and second-quarter results.
An increase in second-quarter profits failed to prevent Flowers reporting a drop in half-year earnings.
Flowers booked a slight increase in second-quarter net earnings, which edged up 0.6% to US$28.4m as pricing action and the benefit of acquisitions offset declining sales volumes.
However, the company's first-half net income fell 4.4% to $66.3m as higher interest costs hit its bottom line.
Revenue for the three-months ended July 14 increased 6.1% to $681.6m, up from $642.6m last year. Pricing contributed 2.3% to gains while sales from the recently acquired Tasty Baking Co acquisition added 4.5%. However, these gains were offset by declining white bread, buns and rolls sales which resulted in a 0.7% drop in volumes.
Half-year net sales increased 9.3% to $1.58bn.
