Milling & Baking News - June 5, 2007 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS JUNE 5, 2007 / Flowers Foods income up 24% in quarter; sales climb 8% FEATURE Executive Strategies, Purchasing: Sara Lee Corp. Story on Page 26 LATE NEWS Lancaster Colony buys baking business COLUMBUS, OHIO - Furthering its focus on food operations, Lancaster Colony Corp. last week said it acquired the principal assets of Marshall Biscuit Company, Inc., a privately owned producer and marketer of frozen rolls and biscuits based in Saraland, Ala. "This acquisition provides us access to private label accounts, new products and additional manufacturing flexibility as we plan to continue production at the Saraland Continued on Page 8 Ingredient Week Sponsored by Story on Page 46 THOMASVILLE, GA. - Net income of Flowers Foods, Inc. in the first quarter ended April 21 was $28,493,000, equal to 46c per share on the common stock, up 24% from $22,914,000, or 37c per share, in the first quarter of 2006. Net sales were $609,947,000, up 8%. The sales gain reflected favorable pricing of 6.4%, positive mix shifts of 1.4% and a 0.4% increase in unit volume. Earnings before income and taxes at Flowers Bakeries Group in the first quarter ended April 21 were $45,117,000, up 16% from $38,885,000 in the first quarter last year. Sales were $489,012,000, up 9%. Commenting in a May 24 conference call, George E. Deese, chairman, president and chief executive officer, said branded retail sales within the Bakeries Group rose 8.1% during the quarter. "Our white bread brand is led by white wheat, and local white bread brands grew by 9.9%," Mr. Deese said. "Sales of Nature's Own variety bread grew by double digits. Our newest brand extension, introduced last fall, Nature's Own all-natural premium bread, also performed very well. "Our buns and rolls grew at a modest 3.6% for the quarter. Store brand and private label bread, buns and rolls increased by double digits." Flowers Specialty Group EBIT in the first quarter was $8,131,000, up 63% from $4,978,000. Sales were $120,935,000, up 6% from $113,998,000. Specialty Group sales were driven by favorable pricing Continued on Page 16 World flour exports falter as countries in Africa take less LONDON - Largely as the result of reduced imports by countries in Africa, the International Grains Council has reduced its estimate of global flour trade in 2006-07 to 7% less than in the previous season. The I.G.C. placed prospective world flour trade for the crop season now drawing to a close at 9,975,000 tonnes in wheat equivalent, down 215,000 tonnes from the trade estimate last made in March. That outgo com- pares with 10,770,000 tonnes in 2005-06 and 10,150,000 in 2004-05. It would be the smallest global outgo since world trade fell to 8,666,000 tonnes in 2003-04. World flour exports reached a record of 11,196,000 tonnes in 1996-97. The I.G.C. estimates do not include durum semolina, which is reported separately. With current semolina trade at 300,000 tonnes, the aggregate of wheat flour trade in 2006-07 was 10,175,000 tonnes, compared with 11,070,000 in 2005-06. In noting the reduction from the March forecast, the I.G.C. said it was due to "a slower-than-expected pace of imports by North and Sub Saharan Africa." Libya, which has been a leading flour importer, slashed its taking in 2006-07 Continued on Page 44

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Milling & Baking News - June 5, 2007