Food Business News - August 16, 2011 - (Page 20)

Ralcorp to buy Sara Lee refrigerated dough business comprised of private brands at around 20% market share. “The (Sara Lee) refrigerated dough business has a leading share of the private brand portion of this category,” he said. “This business will operate as part of our frozen bakery division, and we would expect the acquisition to close in 60 to 90 days. This acquisition is consistent with our growth through acquisition strategy, and allows Ralcorp to immediately become a private brand leader in the refrigerated dough category.” Mr. Hunt said given the refrigerated dough businesses higher margins and free cash flow, he expects the acquisition to create additional value for Ralcorp’s shareholders. “The percentage impact of this accretion will be even more significant after the Post Foods separation, as our private-brand earnings base will be smaller,” he said. “Given the high quality of the business, the attractive financing markets and the tax attributes and synergy potential of the trans-action, this acquisition represents the continuation of our strategy of enhancing shareholder value through private-brand acquisitions.” The business is expected to enhance Ralcorp’s cash flow and generate operational synergies of approximately $6 million to $8 million annually after the third year post-closing, excluding onetime costs, Ralcorp said. Meanwhile, the Continued from Page 1 the business and its approximately 700 employees will operate as part of the broader Ralcorp Frozen Bakery Products division. “We are excited about the addition of the refrigerated dough business to the Ralcorp family of products,” said Kevin J. Hunt, co-chief executive officer and president of Ralcorp. “This transaction will allow Ralcorp to be a private-brand leader in the $1.8 billion refrigerated dough category. Together with the refrigerated dough business, we will continue to provide our customers with the high-quality service and products they have come to expect from Ralcorp.” In a conference call with financial analysts, Mr. Hunt said that the No. 1 brand in the refrigerated dough category has a 70% market share and the No. 2 brand has a 10% share with the remainder Ralcorp net down on impairment charge ST. LOUIS — A $32.1 million impairment charge coupled with higher expenses dragged down net earnings at Ralcorp Holdings, Inc. during the third quarter of fiscal 2011. Net income in the period ended June 30 totaled $28.3 million, equal to 51c per share on the common stock, down 47% from $53 million, or 97c per share, in the same period a year ago. Excluding special items, though, the company earned $1.15 per share, up from $1.11 per share in the same period of fiscal 2010. The impairment charge totaling $32.1 million was related to the Post Shredded Wheat and Grape Nuts trademarks based on reassessments triggered by the announced separation of Post Foods from Ralcorp. The impairment was due to reductions in anticipated future sales as a result of competition and a reallocation of advertising and promotion expenditures to higher-return brands, Ralcorp said. Net sales in the third quarter rose 22% to $1,171.9 million from $962.4 million. Profit contribution in the Branded Cereal Products segment totaled $54 million, down narrowly from $54.1 million in the same period a year ago. Net sales in the segment totaled $244.1 million, up 1% from $242.7 million. “Volumes were down across most of the Post brand portfolio driven by reduced trade spending compared to the aggressive spending levels a year ago and competitive promotional activity,” Ralcorp said. “The reduction in trade spending is part of a continuing focus on more efficient trade program investments.” In the company’s Other Cereal Products segment, profit contribution eased to $21.9 million from $22 million, while sales rose 10% to $217.1 million from $197.6 million. Third-quarter profit contribution in the Frozen Bakery Products segment climbed 23% to $21.5 million from $17.5 million. Net sales also were higher, rising 15% to $187.3 million from $162.2 million. Ralcorp attributed the sales improvement to volume gains for food service and retail products, incremental sales from the fiscal 2010 acquisition of Sepp’s Gourmet Foods, and higher pricing, partially offset by the effects of volume declines in the in-store bakery channel. Profit contribution in the Pasta segment was $27.1 million on sales of $140.4 million. Ralcorp said sales were up 4% from last year (pre-acquisition of American Italitan Pasta Co.) as a result of higher net selling prices, which more than offset a 5% overall volume decline. Profit contribution in the Snacks, Sauces & Spreads segment fell 28% to $26 million from $35.9 million, while sales rose 6% to $383 million from $359.9 million. Ralcorp said profit in the segment was adversely affected by significantly higher raw material costs, including cashews, peanuts, tree nuts, oils, wheat and packaging. Companywide for the nine months ended June 30, Ralcorp had net earnings of $182.9 million, or $3.33 per share, up 10% from $166.9 million, or $3.02 per share, in the first nine months of fiscal 2010. Nine-month net sales were $3,517.8 million, up 21% from $2,919.3 million. FBN 20 FOODBUSINESS NEWS ® August 16, 2011

Table of Contents for the Digital Edition of Food Business News - August 16, 2011

Food Business News - August 16, 2011
Ralcorp to buy Sara Lee refrigerated dough business
Whey protein’s emerging mass appeal
Gluten-free labeling in the spotlight
Web Contents
Editorial - Search for insights in P.&G.’s farewell to food
Nestle profi t down in fi rst half of year
Sara Lee income up sharply in year
Pilgrim’s Pride’s second-quarter earnings plunge
Snyder’s-Lance swings to loss in quarter
Consumers taking active role in beverage trends
Cargill recalls 36 million lbs of ground turkey
Consumers more concerned with fat, calories than HFCS
Investment group partnering with Kettle Cuisine
Smart Balance purchases gluten-free food company
Sunsweet acquires Function Drinks
Kraft's big Split
Additional amicable separations
Ralcorp to buy Sara Lee refrigerated dough business
Ralcorp net down on impairment charge
F.D.A. warns Lazy Larry brownies are unsafe
Cott income climbs 19% in second quarter
Lower salad volumes contribute to loss at Chiquita
Restaurant Performance Index above 100 in June
Cost and taste remain barriers for functional foods
Sugar prices strong as supplies tighten
Gluten-free labeling in the spotlight
Health and wellness remains at the heart of oil innovations
Inside the guar gum bubble
Use hydrocolloids to save on costs
Dairy Business News
Conditions remain diffi cult for Dean Foods
Dean Foods suffers loss after litigation charge
Whey protein’s emerging mass appeal
Adding ethical value
Dannon adds Greek Oikos to portfolio
Caribou adds ‘Grown-up Grilled Cheese’ to menu
Beech-Nut to co-brand baby food with Mott’s
Earth’s Best expands Sesame Street line
Popchips introduces jalapeño variety
Kettle Brand launches reduced-fat chip line
Tropical fl avor line extends beyond familiar
SunOpta completes purchase of juice company
Spicetec names director of marketing
Carton protects fragile products
GPC hires scientist, sales representative
F.D.A. has no objection to krill oil’s GRAS status
Birko to buy maker of washing, pasteurizing systems
Ingredient Markets
Ad Index
Food Business in the News

Food Business News - August 16, 2011