Food Business News - June 21, 2011 - (Page 17)

Calavo earnings decline due to higher costs Mountaire Farms acquiring bankrupt poultry company SEAFORD, DEL. — Allen Family Foods Inc. (A.F.F.) has filed Chapter 11 bankruptcy protection citing changes in the market for poultry. On the heels of the bankruptcy filing, Mountaire Farms of Delaware Inc. and Seaford Milling Co., its newly formed affiliate, announced they had entered into an asset purchase agreement to acquire the entire inventory, hatcheries, feed mill, breeder operations, rendering operations and production assets of A.F.F., Allen Hatchery Inc. and JCR Enterprises Inc. A.F.F. said it would continue to own its corporateowned grow-out farms and SANTA PAULA, C CALIF. — C Calavo G Growers, Inc., a producer and marketer of fresh and prepared avocados and other food products, saw its net income decline during the second quarter due to higher costs in the company’s prepared avocado business due to a lack of fruit volume and weather-related delays of fresh tomato shipments, according to the company. Net income for the quarter ended April 30 was $2,404,000, equal to 16c per share on the common stock, a decline compared with the same period in fiscal 2010 when the company earned $4,793,000, or 33c per share. Sales for the quarter increased slightly to $118,720,000 in 2011 from $109,219,000 in 2010. “Calavo continues to execute its operating plan well,” said Lee E. Cole, chairman, president and chief executive officer. “Our second-quarter results instead reflect fluctuations inherent to our Fresh and Calavo Foods segments: adverse weather and cyclically higher fruit costs, which resulted in a drag on margins in our prepared avocado business. The impact of these two factors, as well as the lower volume of fresh avocados, account primarily for the difference in our second-quarter operating performance year over year.” In the company’s Fresh business unit sales grew 11% to $107.7 million during the second quarter of 2011. In the Prepared Foods business unit, sales declined to $11.1 million in 2011 from $12 million in 2010. “Insufficient volume in the marketplace at present is creating over-reliance on fruit sourced from Mexico and causing avocado prices to surge,” Mr. Cole said. “These high prices are indicative of the strong industry demand for fresh avocados, but have precisely the opposite effect on our prepared guacamole business: soaring fruit costs are constraining margins in that segment.” For the first six months of fiscal 2011, Calavo’s net income was $4,715,000, or 32c per share, down from $7,067,000, or 49c per share, during the first six months of fiscal 2010. Sales during the first six months of 2011 were $210,039,000, up from $176,539,000 in the same period of fiscal 2010. The company also announced it completed the acquisition of Renaissance Food Service Group L.L.C. on June 1. “The acquisition of R.F.G. is a game-changer for Calavo,” Mr. Cole said. “We immediately reshape our company — and, specifically, our Calavo Foods business unit — into a significant competitor in the rapidly expanding fresh refrigerated packaged goods category through an array of products for both the produce and deli departments of grocery retailers. The extensive current portfolio of R.F.G. products — fresh-cut fruit, as well as ready-to-eat and recipe-ready vegetables, to name just a few items — are highly complementary to Calavo Foods and our company provides a strong platform and resources to facilitate future growth. “Through R.F.G., we gain entry to a high-demand grocery category, a capable management team with demonstrated ability to grow the acquired company, and recognizable brands, including Garden Highway and Chef Essentials. Furthermore, R.F.G.’s rapid productdevelopment capabilities are impressive and we expect to leverage that strength further, as well as the new subsidiary’s ability to supply retailers with high-quality goods through justin-time delivery nationwide on a same- or nextday basis.” FBN related farmland operations. Approximately 2,300 people in Delaware, Maryland and North Carolina are employed by A.F.F. Any acquisition of Allen’s operations will require bankruptcy court approval. “Pending court approval, our intention would be to commence operations as soon as possible,” said Dave Pogge, chief executive officer of Mountaire. Mountaire Farms also announced expansion plans for its processing facilities in Selbyville and Millsboro, Del. The planned expansion will increase the need for area poultry growers to support an additional 400,000 birds per week. “Although the poultry industry continues to face challenges, we are optimistic about the opportunities for growth in the Delmarva region and expect the benefits in the coming years to justify the investment needed for expansion,” Mr. Pogge said. FBN June 21, 2011 FOODBUSINESS NEWS ® 17

Table of Contents for the Digital Edition of Food Business News - June 21, 2011

Food Business News - June 21, 2011
C.D.C. report fi nds increase in salmonella infections
General Mills sees ‘robust’ growth opportunities in global yogurt category
Following Jimmy
Web Contents
Editorial - German E.coli outbreak underscores need to fund F.S.M.A.
ConAgra acquires Marie Callender’s trademarks
Kraft investing to eradicate malnutrition
Perkins & Marie Callender’s fi les for bankruptcy
Snack food sales reach $64 billion in 2010, may top $77 billion by 2015
Recession seen triggering sharp drop in food product introductions
Cargill opens Latin American innovation center
John Bilbrey to helm at Hershey
ICL Performance to acquire Cosmocel Quimica
Sugar bull
Smithfield terminates Campofrio bid
Omega-3 food, beverage market grows 11%
Roark Capital ups presence in food industry
Calavo earnings decline due to higher costs
Mountaire Farms acquiring bankrupt poultry company
Diamond Foods returns to profi tability in third quarter
Nestle water efforts recognized
C.D.C. report points to increase in salmonella infections
Consumers await full impact of higher food prices
A difficult disappearing act
Innovation honored by the I.F.T.
Mintel: Functional foods ‘on life support’
Allergen labeling guidance needed
Creating a defi nition of sustainable nutrition
German E. coli outbreak may lead to changes
Chronic inflammation: The next opportunity?
ConAgra Mills unveils food safety system for flour
Finding fiber everywhere
Spicy fl avors moving beyond heat
Dairy Business News
Commission clears Lactalis acquisition of Parmalat
New texture system replaces milk fat in dairy products
Researchers target sodium redution in cheese
General Mills sees ‘robust’ growth opportunities in global yogurt category
Saputo fiscal year earnings rise 18%
New Danisco system targets artisan ice cream
Researchers target sodium reduction in cheese
Single-serve licensing
Quiznos adds three concepts to menu
Flax USA introduces Flaxmilk
Johnsonville Sausage adds chicken varieties
General Mills adds brownies to Fiber One line
Farley’s & Sathers updates Tree Top line
Ingredient Market Trends
Senate vote to end ethanol support seen as symbolic
Ingredient Markets
New container may hold two compatible products
Solbar names president of U.S. business
Sensient launches naturally-sourced colors in dry state
Comax develops fl avors for energy drinks
Puratos launches bake-stable chocolate fi llings
DSM completes U.S. innovation center
Sea salt assists in sodium reduction
Ad Index
Food Business in the News

Food Business News - June 21, 2011