Milling & Baking News Corporate Profiles - October 2011 - (Page 16)

Grain-based Foods down as much. At 264,260,200 units, Flowers bread sales were down 2.5% from the year before. The only major baking company to achieve unit sales growth was Hostess Brands, Inc., Irving, Texas. At 237,926,500, Hostess bread sales were up 3% from a year earlier. Hostess, though, had its own set of challenges. According to the SymphonyIRI data, Hostess took the smallest price increase price swings create uncertainty and stress on management to do everything in our power to level these costs out as best as we can.” Mr. Shiver said bakers, including Flowers, look to avoid raising prices when possible. Such restraint has not been possible over the past years, even after cost-cutting steps were taken, he said. “We have taken pricing this year, and may have more increases in cake during the of any of the largest baking companies over the past 12 months. The average unit price of a Hostess branded bread rose 1.5% in the 52 weeks ended Aug. 7, versus 6% for Bimbo, 3% for Sara Lee and 5% for Flowers. Pressure on baking companies to raise prices has been intense. Baking ingredient prices, while holding within a reasonably narrow range in recent months, are considerably higher than prevailed a year ago. The white pan bread index, as compiled by Milling & Baking News, was 212.2 as of Aug. 5, up 15% from a year earlier and up 31% from August 2009. The index, which is based on the standard formula for white bread, has been lifted by prices for most of the ingredients in bread — flour, shortening and sweeteners. “Costs for our key ingredients — wheat, sugar, cocoa, etc. — are up precipitously,” Mr. Shiver said. “Higher prices and erratic third and fourth quarters of 2011,” he said. “We also anticipate taking more pricing action in our direct-store delivery business over the remainder of the year. We believe our Nature’s Own brand is strong enough to absorb price increases. But believe me, before we initiate any price increases, we have worked to eliminate as much of the costs as we possibly can.” While tracking how the pricing environment is affecting Hostess Brands profitability is not possible because the company is privately held, news sources have suggested the company, formerly the nation’s largest baking business, is struggling. On Sept. 2, The Wall Street Journal said Hostess has again hired restructuring advisers. During the days when the company was known as Interstate Bakeries Corp., Hostess spent several years in bankruptcy before emerging in February 2009. While Hostess said at the time the bankruptcy process included concessions from the company’s union, it was not clear whether the concessions were sufficient to leave Hostess competitive. The WSJ said Hostess has hired the law firm Jones Day and financial services firm Perella Weinberg Partners to negotiate with creditors and attempt to rework the company’s finances. The WSJ noted that no restructuring appears imminent for Hostess, and adequate cash is available to operate in the near term. Earnings at Grupo Bimbo also were under pressure, with a significant part of the pressure coming from the U.S. market. In the most recent quarter, the period ended June 30, Grupo Bimbo S.A.B. de C.V. net income was NP1,054 million ($90,725,000), down 16% from the same period a year earlier. Operating income in the quarter fell 8% for B.B.U. and was down 10% for the first half of the year. “Clearly, the raw materials environment was very challenging,” said Daniel Servitje, c.e.o. of Grupo Bimbo. “The basis of comparison was tough with the increasing commodity costs for a weighted basket of our key inputs at around 20% and 30% for wheat flour alone.” Also down has been Flowers Foods net income. In the three months ended July 16, Flowers earned $28,210,000, down 16% from $33,756,000 during the second quarter a year earlier. Flowers Foods shares have declined about 20% from the company’s 52-week high. Over the past year the company has announced an aggressive geographic expansion plan, targeting penetration in 75% of the United States within five years. At the time of the announcement, the company was at 50%. A few weeks after unveiling the plan, Flowers announced plans to acquire Tasty Baking Co. for $175 million in cash. While the move was in the snack cake rather than bread category, Flowers said the acquisition 16 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Profiles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - October 2011

Milling & Baking News Corporate Profiles - October 2011
Contents
Editorial - Headwinds yes, but improvement looms
Grain-based foods
Frozen meals
Soup
Beverages
Beef, chicken and pork
Dairy
Confectionery
Food service
Company Overview - Grupo Bimbo S.A.B. de C.V.
Company Overview - Campbell Soup Co.
Company Overview - The Coca-Cola Co.
Company Overview - ConAgra Foods, Inc.
Company Overview - Groupe Danone S.A.
Company Overview - Dean Foods Co.
Company Overview - Diamond Foods, Inc.
Company Overview - Dunkin’ Brands Group Inc.
Company Overview - Flowers Foods, Inc.
Company Overview - General Mills, Inc.
Company Overview - Hain Celestial Group Inc.
Company Overview - The H.J. Heinz Co.
Company Overview - The Hershey Co.
Company Overview - The Kellogg Co.
Company Overview - Kraft Foods Inc.
Company Overview - Krispy Kreme Doughnuts Inc.
Company Overview - Mars, Inc.
Company Overview - Nestle S.A.
Company Overview - Panera Bread Co.
Company Overview - PepsiCo, Inc.
Company Overview - Ralcorp Holdings, Inc.
Company Overview - Sara Lee Corp.
Company Overview - Smithfield Foods, Inc.
Company Overview - J.M. Smucker Co.
Company Overview - Snyder’s-Lance, Inc.
Company Overview - Tyson Foods, Inc.
Company Overview - Unilever P.L.C.
Ad Index

Milling & Baking News Corporate Profiles - October 2011

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