Food Business News - November 17, 2015 - (Page 13)

Kraft Heinz integration showing progress PITTSBURGH - The Kraft Heinz Co.'s Nov. 5 release of its third-quarter results for fiscal 2015 was the first for the newly merged company. With the first 120 days operating as a combined company completed, leaders with the company are continuing the integration journey and instilling a new operating philosophy throughout. For the quarter ended Sept. 27, the company recorded a loss of $303 million on quarterly sales of $6,120 million. Much of the loss was due to costs associated with the integration of the two companies. "Our third-quarter results reflect continued progress as we integrate these two great companies while driving greater accountability, discipline and efficiency," said Bernardo Hees, chief executive officer. "As we implement and expand methodologies such as zero-based budgeting, management by objectives and revenue management, we expect to continue creating the freedom to invest in our business and accelerating long-term profitable sales growth." Mr. Hees said Nov. 5 in a conference call with financial analysts that the company has had success with such innovation efforts as Lunchables, P3 and the launch of Heinz Yellow Mustard. "Investments we have made in ketchup and pasta sauce are driving solid consumption gains in the markets where it competes," he said. "At the same time, our challenges have continued in certain categories like ready-todrink beverage, and dinners in the United States, and frozen meals in a number of foreign markets that has held back our growth; so more work needs to be done." Mr. Hees said the Kraft Heinz Co.'s strategy is based on three objectives - profitable sales growth, best-inclass sales margins and a return on capital as an investment-grade company. "Let me speak to each, starting with profitable sales growth," he said. "We are a sales organization, and as we have said before, we believe there are multiple avenues for sales growth ahead of us by focusing on four pillars. First, innovation, fewer, bigger, and bolder; that's what we call the big bets innovation. Second, by having high investment in working media dollars; third, to leverage the scale of our go-to-market capabilities by building aggressive sales teams; and finally, by taking Kraft brands global over time." To achieve best-in-class margins, the company is focusing on zero-based budgeting and supply chain consolidation. On Nov. 4, the company announced it was closing seven manufacturing plants in North America and eliminating 2,600 jobs. "In doing so, we eliminate excess capacity and reduce operational redundancies for the new combined company," Mr. Hees said. "We will also invest heavily in modernizing many of our facilities with installation of state-of-theart production lines and this should facilitate further product quality improvements and innovation." George Zoghbi, chief operating officer of Kraft Heinz's U.S. Commercial Business, said future profitability will hinge on maintaining consistent pricing. " ... It has held up in what has been a high pressure deflationary environment in some of our key categories, and we feel very good about that," he said. Second, Mr. Zoghbi said cost savings and productivity programs initiated before the merger were well executed and completed on time. "So, overall, a good start for our team in the United States, and we know where our opportunities to improve reside," he said. FBN Credit Suisse lowers Dean Foods' stock to 'underperform' NEW YORK - Although the dairy industry cycle turned favorable for Dean Foods Co. this year, underlying challenges in the industry have not gone away. As a result, Credit Suisse on Nov. 10 downgraded Dallas-based Dean Foods' stock to underperform. "We fear that consensus estimates will go lower from here as the dairy cycle corrects itself and farmers cut back on production to boost dairy prices," Robert Moskow, November 17, 2015 an analyst with Credit Suisse, wrote in a Nov. 10 research note. "As a result, we think Dean's stock has less-than-average upside over the next 12 months in relation to our food stock coverage." During the third quarter of fiscal 2015, ended Sept. 30, Dean Foods posted net income of $20,233,000, equal to 22c per share on the common stock, up from the same quarter of the previous year when the company recorded a loss of $15,972,000. Sales for the quarter fell 14% to $2,033,693,000 when compared with the previous year. Mr. Moskow acknowledged several risks to Credit Suisse's downgrades, including the possibility that the research firm may be overestimating the speed at which dairy prices will turn higher, and the fact it may be underestimating the positive impact of management's strategic shift in its selling and marketing efforts toward a national brand and higher price realization. "Dean's market share improved 10 b.p.s. sequentially in 3Q despite a 9% increase in its branded price premium over private label," Mr. Moskow said. "However, we have trouble believing that these efforts will fully insulate the business from what has historically been such a volatile industry." FBN FOODBUSINESS NEWS ® 13

Table of Contents for the Digital Edition of Food Business News - November 17, 2015

Food Business News - November 17, 2015
Starbucks becoming a ‘food destination’
Sugar, corn sweetener court battle under way
Beverage Business News - Redesigning fruit juice
Table of Contents
Web Contents
Editorial - Climate change takes center stage in Paris
Hain earnings surge; U.S. grocery sales disappoint
Local promotions set to sizzle as a menu trend
Smucker focuses on redefining the coffee experience
Kraft Heinz integration showing progress
Credit Suisse lowers Dean Foods’ stock to ‘underperform’
Dean Foods betting big on DairyPure brand
Food waste reduction 2.0
TreeHouse Foods to acquire ConAgra’s Private Brands business
Efficiency gains drive TreeHouse earnings
Seneca acquires largest maraschino cherries maker
Popchips names new c.e.o.
Amazon dips foot into food delivery in L.A.
Schwan simplifying ingredient list across entire product line
Washington - Producer groups begin to take sides on T.P.P.
Ingredient Innovations - High-oleic options
Health and Wellness - Targeting bone and joint health
New Menu Items
Ingredient Market Trends - U.S.D.A.’s Crop Production and WASDE reports bearish
Ingredient Markets
Supplier Innovations and News
Ad Index

Food Business News - November 17, 2015