Milling & Baking News - August 3, 2004 - (Page 1)

Theinewsweeklyiofigrain-basedifoods Smucker to sell bakery products, food service units of Multifoods ORRVILLE, OHIO - The J.M. Smucker Co. said last week it will divest the bakery products and food service businesses of International Multifoods Corp., the Minneapolis-based company it purchased earlier this summer for $840 million. Smucker's senior officials had openly hinted before closing the Multifoods deal that they planned to divest the division, representing about a quarter of Multifoods' total annual revenue. Smucker said last week that the business was "not aligned" with its food service strategy. Smucker will retain the consumer desserts and specialty mixes acquired by Multifoods in 2001 as part of an agreement LATE AUGUST 3, 2004 / allowing General Mills, Inc. to purchase The Pillsbury Co. Multifoods produces bakery products for food service and other customers at eight distribution facilities across North America. The division's sales in the fiscal year ended Feb. 28 totaled $202.5 million, but it experienced declining volumes in the months preceding the company's acquisition by Smucker. Revenue in the final quarter of fiscal 2004 dropped 17%, yielding an operating loss of $1.5 million. With customers ranging from Costco and Pizza Hut to Dunkin' Donuts and WalMart Stores, Inc., the food service division makes baking mixes, fillings, icings and frostings for various applications and sells bulk items, including flour, to institutional customers. Its brands include Multifoods, Pillsbury, Jamco, Gourmet Baker and Fantasia. Multifoods had attempted to boost the division's performance before its acquisition by Smucker. Among other steps, Gary Costley, the former chief executive of Multifoods, announced plans in March for the business to launch a new line of thawand-serve muffins called Divine Centers, featuring 1 oz of creme cheese filling. Nevertheless, the division operates in a highly competitive, low-margin environment. Mitch Pinheiro, a food industry analyst with Philadelphia-based Janney Montgomery Scott, said it makes sense for Smucker - focused on marketing branded Continued on Page 9 NEWS S.E.C. probes issues at Krispy Kreme WINSTON-SALEM, N.C. - Krispy Kreme Doughnuts, Inc. revealed last week that the Securities and Exchange Commission has initiated an informal, non-public inquiry into the company's franchise reacquisitions and recent reduction in earnings guidance. The inquiry comes on the heels of several shareholder lawsuits against the company after, in early May, it issued its first earnings warning in its four years as Continued on Page 8 Mennel Milling adjusts to rapidly altering industry environment Even cookie sales up in Kellogg second quarter; profits up 16% BATTLE CREEK, MICH. - Net income of Kellogg Co. in the second quarter ended June 26 was $237.4 million, equal to 58c per share on the common stock, up 16% from $203.9 million, or 50c per share, in the second quarter of 2003. Sales were $2,387.3 million, up 6%. While Kellogg enjoyed strength across its entire portfolio of products, the upward charge was led by Retail Snacks, including the company's beleaguered cookie busi- ness. Sales of retail snacks in the quarter rose 7% "due to innovation and improved execution," Kellogg said. Before 2004, the cookies business had been a consistent drag on sales and earnings growth at Kellogg. Still, it would not be accurate to characterize the cookie category as thriving, said Carlos Gutierrez, Kellogg chairman and chief executive officer. "The cookies Continued on Page 17 inside Story on Page 21 THIS WEEK Tate & Lyle to settle HFCS civil lawsuit 10 Ingredient Corn Products earnings surge in quarter 14 I.F.T. expo focuses on healthful ingredients 18 Week 39

Table of Contents for the Digital Edition of Milling & Baking News - August 3, 2004


Milling & Baking News - August 3, 2004