Milling & Baking News Corporate Profiles - October 2011 - (Page 84)

Company Overview Diamond Foods, Inc. Pending acquisition of Pringles improves scale D iamond Foods, Inc., San Francisco, popped open more revenue growth opportunity in 2011. The company in April agreed to merge the Pringles business, owned by The Procter & Gamble Co., into Diamond Foods in a transaction valued at $2.35 billion. The company already had gobbled up snack category market share in 2010 with the acquisition of Kettle Foods from Lion Capital LLP for $615 million. Pringles potato crisps are manufactured in the United States, Europe and Asia. “Pringles is an iconic, billion dollar snack brand with significant global manufacturing and supply chain infrastructure,” said Michael J. Mendes, chairman, president and chief executive officer of Diamond Foods. “Our plan is to build upon the brand equity Pringles has established in over 140 countries. This strategic combination will create an independent, global leader in the snack industry with a focus on quality and innovative products.” The pending acquisition should more than double Diamond Foods’ snack sales in the United States and the United Kingdom and give Diamond Foods access to such markets as Asia, Latin America and Central Europe. Diamond Foods said the acquisition should increase the company’s scale in U.S. grocery, mass merchandise, drug and convenience channels. “This new scale should allow us to create more impactful programs for our retail partners, leading to a higher level of display for all of our snack brands,” said Andrew Burke, chief marketing officer of Diamond Foods, in a Sept. 15 earnings conference call. “Gaining more off-shelf display is critical in the snack category, as we typically exceed 300% to 400% lifts in sales when we combine offshelf display with customer features.” Diamond already owned successful brands before the Pringles’ deal was announced. Emerald Nuts is a top-seller among almonds, mixed nuts and whole cashews, Mr. Burke said, while Pop Secret owns almost a 28% market share in the microwave popcorn category. He added Diamond Foods wants to expand Kettle’s small bag penetration across the convenience channel and the deli sections of supermarkets. Due to the Kettle acquisition, Diamond net sales rose to $965.9 million in the fiscal year ended July 31, up 42% from the previous fiscal year. Fiscal-year net income of $50.2 million, or $2.22 per share, was nearly double that of $26.2 million, or $1.36 per share, in the previous year. “Each of our snack brands is growing faster than the category and gaining share through expanded distribution, increasing sales velocity Michael J. Mendes and strong performance of new items,” Mr. Mendes said in the Sept. 15 conference call. “We continue to benefit from operating leverage as a result of increased scale, which allows us to continue to invest in our brands.” Assuming the Pringles transaction closes in December of 2011, Diamond Foods has given e.p.s. guidance of $3.05 to $3.15 and anticipates total sales of between $1.85 billion and $1.95 billion for fiscal 2012. Diamond Foods expects to increase advertising investment 20% to 25% in the first half of fiscal 2012 when compared to the first half of fiscal 2011. Mr. Burke said Diamond Foods planned to launch a national campaign this fall that will be anchored by television with national print, digital and in-store elements. CP F ast acts Diamond Foods, Inc. agreed to merge the Pringles business into Diamond Foods in a transaction valued at $2.35 billion. Fiscal-year net income nearly doubled to $50.2 million, or $2.22 per share. Diamond Foods expects to increase advertising investment 20% to 25% in the ﬁrst half of ﬁscal 2012. 84 \ October 2011 Milling & Baking News • Food Business News • Baking & Snack • Meat & Poultry Corporate Proﬁles

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Milling & Baking News Corporate Profiles - October 2011