Milling & Baking News - January 13, 2004 - (Page 1)

Theinewsweeklyiofigrain-basedifoods Year-end REVIEW As overall market surges, grain-based foods shares fall NEW YORK - The Grain-Based Foods Share Index in 2003 lost ground, moving in the opposite direction from the surging broader market. At 9327.64, the Grain-Based Foods Share Index was down 4.9% in 2003 and failed to close above the 10000 point mark, a level first reached in 2002. The decline ended a streak of three years of advances for the index, just as the broad index gains ended a three-year string of declines for the overall market. The drop of 487 points in the GrainBased Foods Share Index, which is based on companies with significant operations JANUARY 13, 2004 / in grain-based foods, rolled back modest gains of the previous two years of 256 in 2002 and 336 in 2001. The index surged 2444 in 2000. The 5% decline in the Grain-Based Foods Share Index contrasted with a 25% gain for the Dow Jones average of industrial shares, a 50% jump in the Nasdaq composite index and a 26% rise in the S.&P. 500 index. Grain-based foods shares also underperformed all S.&P. 500 economic sectors, including consumer staples, which were up 9% in 2003. In contrast to the 6% decline in grain-based shares, each sector of the S.&P. 500 posted a gain in 2003: information technology, up 47%; consumer discretionary, up 36%; materials, up 35%; industrials, up 30%; financials, up 28%; energy, up 22%; utilities, Continued on Page 25 Costley details plan Sugar users celebrate trade deal prompted by Deloitte amid outcry from domestic growers Consulting assessment WASHINGTON - U.S. sugar producers It's unclear just how much MINNEAPOLIS - Following a major review by Deloitte Consulting, International Multifoods Corp. will undergo a significant restructuring, according to Gary E. Costley, chairman and chief executive officer. Mr. Costley fleshed out plans for the restructuring in the Multifoods third-quarter conference call Jan. 6. Following Deloitte's analysis, Mr. Costley said Multifoods has decided to "simplify our business and reduce operating costs in response to the realities of our business and the marketplace in which we compete." Multifoods is staffed for a growth strategy that the company will not be able to execute in the near term, he said. "We also know we operate in a highly competitive industry where market share gains bring swift responses from our competitors," he said. "Consequently, we need to free Continued on Page 14 warn that provisions in a recent trade agreement eventually could double sugar imports from Central America, devastating their industry in the process. U.S. sugar users have a far different take on the matter. LATE NEWS N O RT H F I E L D , ILL. - Kraft Foods Inc. last week unveiled a new global organizational structure designed to more strongly position the company to deliver sustainable growth. The move comes less than a month after Kraft Continued on Page 8 Holden to new Kraft post inside domestic sugar prices would decline if Congress this summer approves the Central American Free Trade Agreement (CAFTA). But the tentative deal struck last month between U.S. trade negotiators and four Central American countries would pave the way for more sugar to flow into the country. As a result, Jeff Nedelman, strategic communications manager with the Coalition for Sugar Reform (C.S.R.), said CAFTA definitely is a step in the right direction for U.S. food manufacturers, especially bakers, confectionery makers and other commercial sugar users. Those companies for years have paid at least twice as much for the sugar they use as their foreign competitors pay on the global market. Mr. Nedelman said many simply no longer can manage that cost differential, which the General Accounting Office has estimated at an extra $1.9 billion Continued on Page 21 THIS WEEK 15 months in jail for donut labeling fraud 9 Ingredient CHS upbeat about fiscal 2004 prospects 17 Kellogg fitness initiative in Canada 20 Week 31

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Milling & Baking News - January 13, 2004