Milling & Baking News - January 16, 2018 - 11

Business

Vertical Group lowers Flowers 4Q
forecast, upbeat about '18
RICHMOND, VA. - While leaving
forecasts for fiscal 2018 and 2019 unchanged, Vertical Group has lowered its
Flowers Foods, Inc. earnings estimate
for the fourth quarter of 2017 by 1c per
share on the common stock, to 15c.
Brett Hundley, an analyst with Vertical Group, said the modest earnings
revision downward reflects a more
sober assessment of Thomasville,
Ga.-based Flowers' Warehouse segment business as well as lingering
effects in Texas from summer hurricanes. Additionally, Mr. Hundley
said the cake category remains competitive, and the market for conventional bread is still sluggish. Despite
these challenges, he noted that the revised estimate leaves full-year earnings at 87c, squarely within management's 85c to 90c per share guidance.

"We expect that Flowers will continue to rely on its Dave's Killer Bread organic bread brand for positive growth,
over the near term," Mr. Hundley
said. "We believe that
the company is on track
with regards to its Project Centennial cost savings plan, whereby it
aims to deliver run-rate
gross cost savings of $70
million to $80 million. Hundley
Such savings should
allow the company to invest more
broadly in brand support, something
that has been lacking in years past. We
expect innovation to tick up alongside
heightened brand support spend, as
the company's new chief marketing officer (Debo Mukherjee) implements his
plan into the second half of 2018."

While summer storms appear to be
a drag on fourth-quarter 2017 results,
Mr. Hundley suggested early-winter
storms may provide a lift in the first
quarter of 2018.
"It should go without saying that
unusual snow events in Florida and
Georgia, together with heavy snow
from Virginia up to Maine, should
work to benefit Flowers in some of its
core footprint areas, relative to the first
quarter of 2017," he said.
Still, the principal source of Mr.
Hundley's optimism is growth expected later in the year.
"We are excited to see what the second half of 2018 may bring, as it relates to sales effects from stepped-up
innovation and brand support spend,"
Mr. Hundley said.
Vertical has a buy recommendation
for Flowers shares with a $21-pershare price target, about 10% higher
than the $19.12 trading price when the
research report was issued. MBN

Federal agency publishes case
study on mixing incident at MGPI
WASHINGTON - The U.S. Chemical
Safety Board (C.S.B.) on Jan. 3 released a 48page case study examining an accident that
took place on Oct. 21, 2016, at an MGP Ingredients, Inc. facility in Atchison, Kas. The
C.S.B. also has published a video detailing
key lessons learned from the incident.
As part of the incident, a mixture of incompatible materials resulted in a chemical release containing chlorine and other
compounds traveling into the community. The cloud affected workers onsite and
members of the public in the surrounding
community. The incident occurred during a routine chemical delivery of sulfuric
acid from a Harcros Chemicals (Harcros)
cargo tank motor vehicle (CTMV) at the
MGPI facility tank farm.
Over 140 individuals, including members

of the public, MGPI employees and a Harcros employee, sought medical attention;
one MGPI employee and five members of
the public required hospitalization as a
result of exposure to the cloud produced
by the reaction.
In the report, titled "Key lessons for
preventing inadvertent mixing during
chemical unloading operations," the
C.S.B., an independent federal agency
responsible for investigating chemical
accidents, identified 11 key lessons from
the incident and outlined clear safety improvements that can be implemented at
similar facilities across the United States.
Among the lessons, the C.S.B. said, are
that facilities should evaluate chemical unloading equipment and processes and implement safeguards to reduce the likelihood

Cargill leaving after 20 years in
Grocery Manufacturers Association
WASHINGTON - Cargill became the
latest major agri-food company to leave
the Grocery Manufacturers Association
(G.M.A.), joining Tyson Foods, Unilever,
Campbell Soup Co., Nestle, Dean Foods,
Mars and the Hershey Co.
"...We have valued our partnership with
G.M.A. and wish to thank its staff for the
services and support provided to Cargill
since our company joined the association
bakingbusiness.com / world-grain.com

in 1998," the company said. "Cargill regularly evaluates our external partnerships
and believes at this time of unprecedented
industry change, we can accomplish our
business objectives outside G.M.A.
"Cargill is committed to nourishing
the world in a safe, responsible and sustainable way and will continue bringing
together people, ideas, and resources
to move the industry forward. Together

of an incident, while considering human
factors that could impact how facility operators and drivers interact with equipment.
Additionally, facility management should
evaluate chemical transfer equipment and
processes and, where feasible, install alarms
and interlocks in the process control system
that can shut down the transfer of chemicals
in an emergency, the C.S.B. noted.
"High-risk operations, like the delivery
and handling of hazardous chemicals,
require strict adherence to safety protocols," said Vanessa Allen Sutherland,
chair of the C.S.B. "An inadvertent mixture can result in a chemical reaction with
extremely dangerous consequences."
Lucy Taylor, lead investigator on the
MGPI case, added, "Facilities need to
work collaboratively with their chemical
distributors to conduct a risk assessment
and develop and agree upon procedures
for chemical unloading to ensure responsibilities are clearly defined." MBN
with our customers and other partners,
we remain focused on delivering products, technology and ways of operating
that build successful businesses and communities, so all people can thrive."
The G.M.A., which will celebrate its
110th anniversary this year, increasingly
has been at odds with some of its members over the direction of food policy.
Campbell Soup, Nestle and Unilever departed the organization over differences
in transparency related to food ingredients, nutrition and other issues such as
G.M.O. labeling and sodium reduction. MBN
Milling & Baking News

January 16, 2018 / 11

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Milling & Baking News - January 16, 2018

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