Milling & Baking News Corporate Profiles - October 2011 - (Page 92)

Company Overview Hain Celestial Group Inc. Focus on inventory management, cash conversion pays off hen it comes to “sexy” in the food business, it’s tough to top Hain Celestial Group Inc. With dozens of well known and less known brands in the natural and organic food categories, the company’s product lines long have appeared squarely on trend with consumer demand. But a review of the company’s strong financial results in fiscal 2011 suggests it was not the company’s product line that made the difference but instead was a heightened focus on basic financial management. Net income of Hain Celestial in the year ended June 30 was $54,982,000, equal to $1.27 per share on the common stock, up 92% from $28,619,000, or 70c per share in fiscal 2010. Net sales were $1,130,257,000, up 23%. “We really focused on inventory,” Irwin Simon, president and chief executive officer, said in an Aug. 23 conference call with investment analysts. “We really focused on cash conversion. Our cash conversion was down to 10 days. We turned our inventory five times, even with all the acquisitions that we have done, all the different s.k.u.s (stockkeeping units), all the new products. “ John Carroll, Hain’s executive vice-president, said the improved profits were particularly noteworthy in the face of a host of serious challenges, W beginning with surging ingredient costs. While the execution may be critical, Mr. Simon also emphasized the importance of the company’s favored positions in some of the strongest categories in the food and beverage industry. “Indications are that despite ongoing challenges in the economy, consumers continue to seek out healthful products from our natural and organic brands,” he said. Expanding on his remarks during the conference call, Mr. Simon explained, “I’ve said it many times, eating healthy is not a fad, it is not a trend, it is becoming more and more a part of life, whether it is gluten-free, lowsodium or caloric intake. More and more consumers read labels today.” Mr. Simon also noted the success Hain achieved in making and integrating acquisitions over the past year. He said the company completed five in fiscal 2011 alone. “We have really upgraded people and made some good people changes,” he said. “And saw some great growth on the acquisitions.” Looking forward, Mr. Simon said the company’s interest in further acquisitions has not diminished. Whetting the company’s appetite are continued attractive borrowing rates. “There are four or five really good acquisitions that we are looking at,” he said. “There Irwin Simon is no guarantee we will complete them, but we are absolutely out there looking at some good acquisitions, strategic acquisitions and most important, accretive acquisitions.” New product introductions also are crucial for continued growth, Mr. Carroll said. Recent successes in new products include Earth’s Best Sesame Street yogurt smoothies in shelf-stable pouches. While results in fiscal 2011 were dramatically better than the year before, particularly toward the bottom line, the company continued to lag most other food companies by a number of key measures. For instance, the company’s operating margin of 9.5% compared with 18.7% at The J.M. Smucker Co., 18.6% at General Mills Inc. and 12.2% at Ralcorp Holdings, Inc. CP F ast acts With interest rate at historically low levels, Hain Celestial sees the acquisition environment remaining highly attractive. Earth’s Best Sesame Street yogurt smoothies in shelf-stable pouches stand out in a roster of new product successes. There is plenty of additional room for improvement in operating margin, relative to peers. 92 \ 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