Milling & Baking News - November 4, 2003 - 10

F I N A N C I A L

R E S U L T S

Lance reverses trend in branded
sales, continues route work
CHARLOTTE, N.C. - Net income of
Lance, Inc. in the third quarter ended
Sept. 27 was $7,624,000, equal to 26c per
share on the common stock, up 48% from
$5,138,000, or 18c per share, in the third
quarter of ﬁscal 2002.
Net sales and other operating revenue in the quarter totaled $145,006,000,
up 7% from $135,753,000
in the year-ago quarter.
In an Oct. 23 conference call, Paul A. Stroup
III, chairman of the board,
said, "A major positive
was the 4% growth in
branded sales, reversing
the trend we have experienced for a
number of periods. The key now is to
sustain branded growth as we continue
our disciplined push to improve the performance of our route sales system."

Branded product sales increased in
the third quarter as higher sales of salty
snacks, traditional sandwich crackers
and nuts more than offset lower sales of
mini sandwich crackers, candy and cakes.
Branded product sales
grew in the double digits
in mass, club and drug
channels and in the high
single digits in grocery
stores, Mr. Stroup said.
"Convenience stores
were
up
modestly;
however, we continued
to lose ground in vending, which experienced
a double-digit decline,
and food service, which was down midsingle digits," he said.
Lance's non-branded revenues increased 13% on continued strength from
private label products, Mr. Stroup said.

South America business helps lift
Corn Products proﬁts in quarter
WESTCHESTER, ILL. - Net income of
Corn Products International, Inc. in the
third quarter ended Sept. 30 was $20 million, equal to 55c per share on the common
stock, up 17% from $17.1 million, or 48c
per share, in the third quarter last year. Net
sales were $582.7 million, up 15%.
Samuel C. Scott III, Corn Products
chairman, president and chief executive
ofﬁcer, called the results "in line" with
targets for the year. "We are particularly
pleased with our performance in South
America, where we posted signiﬁcant
gains in sales and operating income as we
continue to rebound from the economic
problems and currency devaluations that
affected the region last year," he said. "We
are also encouraged by the progress made
by our U.S. business thus far in 2003."
Operating results were mixed for the
North American business in the third
quarter. Operating income was $16.7 million, down 5% from the third quarter last
year. Net sales were $343.5 million, up 7%.
Corn Products attributed the sales
gain to improved pricing and product
mix, more than offsetting a reduction
in volumes. The major power grid outage and its aftermath adversely affected
results in Canada. "This volume is expected to be recovered before the end of
the fourth quarter," Corn Products said.
Mexican results were improved from
last year, though the tax on beverages
sweetened with high fructose corn syrup

10 / Milling & Baking News, November 4, 2003

continued to depress sales and earnings.
The proﬁtability improvements reﬂected
cost reductions and alternative business
strategies."
In an Oct. 21 conference call, James W.
Ripley, vice-president and chief ﬁnancial ofﬁcer, said that the improvement
in Mexico was particularly noteworthy
since there was a 12-day period during
last year's third quarter when the tax
was suspended for a time.
Regarding the U.S. business, Mr. Ripley
said, "While it is well documented that
the U.S. soft drink industry has slowed,
we generated solid operating income in
the U.S. And though we haven't seen
year-to-date through September volumes
from the Corn Reﬁners Association for
members' total shipments, it appears that
overall volume numbers are just slightly
less than ﬂat. Most importantly we expect
that by year's end our North American
business will have greater operating income than last year even with the HFCS
problems continuing in Mexico."
Asked directly whether non-beverage
customers are re-formulating away from
HFCS because of concerns about obesity,
Mr. Scott responded, "Absolutely not.
We haven't heard anything of that; we
haven't seen anything in that direction."
In response to a question about U.S.
proﬁts and utilization rates, Mr. Scott
declined to break out U.S. proﬁtability.
"Utilization rates, for the grind in the

Mr. Stroup said that in the next few
weeks, Lance will complete the realignment of the second and third of its sales
districts to undergo that process. "We are
conﬁdent that when this process is completed in the latter part of next year, we
will have much better route economics
and higher sales per stop," he said.
Lance operates a total of 1,700 routes
in 17 sales districts.
Mr. Stroup said Lance is working to
bring healthier snacks to the market as
part of its brand building efforts. Noting
that the company has eliminated trans
fat from its chip products, he added,
"We are currently working with suppliers to ﬁnd a cost-effective oil substitute
that is suitable for baked goods and will
preserve shelf life as well as taste and
quality."
Net income of Lance in the 39 weeks
ended Sept. 27 was $12,379,000 on
sales of $421,512,000, compared with
$17,374,000 and $414,451,000, respectively, in the ﬁrst nine months of the
previous year. MBN

U.S., is in the upper 90s," he said. "On
most of the ﬁnishing lines, fructose in
particular, it's in the mid 80s. Most of the
other lines are in the 80s as well, some
in the lower 80s and some in the upper
80s." Overall grind has been boosted
by the ethanol business, Mr. Scott said.
"Utilization will continue at that level or
go up," he said.
In the nine months ended Sept. 30,
North American operating income was
$43 million, up 4% from the ﬁrst three
quarters last year. Net sales were $996.8
million, up 9%.
South American operating income in
the third quarter ended Sept. 30 was $21.6
million, up 59% from the same period last
year. Sales were $129.1 million, up 37%.
"The increase in net sales and operating income was due to a double-digit
volume increase in the region and signiﬁcant margin improvement in Argentina and Brazil as a consequence of better pricing and product mix, improved
efﬁciencies on manufacturing costs, as
well as strengthened currencies in both
countries," Mr. Scott said.
Asia/Africa operating income was
$13.1 million, down 9% from the third
quarter last year. Sales were $68.1 million, up 4%.
In the nine months ended Sept. 30,
net income of Corn Products was $51.9
million, or $1.44 per share, up 11% from
$46.9 million, or $1.31 per share. Net
sales were $1,684.1 million, up 14%.
Mr. Scott predicted better U.S. pricing and margins in 2004 as well as
"reduced costs through production and
bakingbusiness.com/world-grain.com

http://www.bakingbusiness.com/world-grain.com

Milling & Baking News - November 4, 2003

Table of Contents for the Digital Edition of Milling & Baking News - November 4, 2003