Food Business News - May 7, 2013 - 10

Commodity costs pinch
Kellogg earnings

BATTLE CREEK, MICH. — Rising commodity costs pressured first-quarter
earnings at Kellogg Co., which reported a 2% decline in net income despite a
rise in comparable sales.
For the quarter ended March 30,
the company had income of $311 million, equal to 86c per share on the
common stock, which compared with
$351 million, or 98c per share, in the
same period a year ago. Sales for the
quarter were $3,861 million, up 12%
from $3,440 million during the same
quarter of the prior year.

The U.S. Morning Foods segment
had an operating profit of $163 million, up from $153 million during the
same period a year ago. Sales for the
segment were $911 million, up from
$897 million during the quarter a year
before.
The U.S. Snacks segment had an
operating profit of $106 million, down
from $123 million during the same
quarter of the prior year. The segment
had sales of $901 million, up from $786
million during the same period of the
previous year.
The U.S. Specialty Channels segment had an operating profit of $78
million, up from $71 million during
the same quarter of the previous year.
Sales for the segment were $379 million, up from $348 million during the
quarter a year before.
“Results in the first quarter were
broadly as we expected, and we’re
pleased to have a solid start to the
year,” said John Bryant, president and
chief executive officer. “We saw good
comparable revenue growth in many
regions around the world, and the
Pringles business continued to post
strong results. As a result, we’re also
pleased to report that we’re on track to
meet our guidance for the full-year.” FBN

Heinz shareholders approve
merger agreement
PITTSBURGH — During an April 30
meeting, a majority of H.J. Heinz Co.
shareholders voted in favor of the
February-announced acquisition of
Heinz by an investment consortium
comprised of Berkshire Hathaway and
3G Capital.
“The board and I want to thank
our shareholders for approving this
historic merger agreement,” said William R. Johnson, chairman, president
and chief executive officer of Heinz.
“When this transaction was announced
on Feb. 14, I said that it would provide
tremendous value to Heinz shareholders. With today’s convincing vote,
Heinz shareholders have confirmed

FOODBUSINESS NEWS

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hi
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their support f
for this extraordinary
transaction and its record valuation of
Heinz.”
The transaction, valued at $28 billion,
including the assumption of outstanding debt, is expected to close in the second or third quarter of 2013. At the closing of the transaction, shareholders will
receive $72.50 in cash for each share of
common stock they own. FBN

Hillshire making strides
post Sara Lee split
CHICAGO — Hillshire Brands Co.
swung to a profit in the third quarter
of fiscal 2013, reversing a loss of $3
million during the same quarter of the
previous year.
For the quarter ended March 30, net
income was $93 million, equal to 76c
per share on the common stock. Income
from continuing operations was $42 million, equal to 34c per share, up 52% from
$27 million, or 23c per share, during the
same period of the prior year.
Sales for the quarter fell slightly to
$924 million from $935 million during
the same quarter a year ago.
“We continue to make progress in
executing our three-year plan, making
strides in brand building, innovation
and rigorous cost management,” said
Sean Connolly, president and chief
executive officer. “Our efforts to stabilize challenged businesses also progressed, but clearly our work here is
not done. Overall, we are pleased with
our efforts to date. In fact, we now expect full year e.p.s. to be at the high
end of our previous guidance.”
Economic challenges pressured
the food service segment, where net
sales declined 5% from the prior year’s
third quarter. The company reported
flat sales in the retail segment and a
decline in frozen bakery, but volume
and sales grew in the company’s meatcentric portfolio, buoyed by strong
performances in Jimmy Dean breakfast sandwiches and bowls, Ball Park
flame-grilled patties and artisanal
brands Aidells and Gallo, offsetting a
decline in Hillshire Farm lunchmeat.
“We saw a strong response where
we increased our advertising investment in the quarter,” Mr. Connolly
said. “We also continued to build out
our innovation pipeline. On the cost
side, we have now identified opportunities to exceed the $100 million savings target we announced at our investor day in June.”
During the first three quarters of fiscal 2013, net income declined to $211
million, or $1.72 per share, from $246
million, or $2.08 per share, during the
previous year. On a continuing operations basis, income rose sharply to
$149 million, or $1.22 per share, from
$42 million, or 36c per share, the previous year.
Sales for the first nine months of the
year declined slightly to $2,958 million
from $2,975 million during the previous year. FBN

May 7, 2013

Food Business News - May 7, 2013

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