Milling & Baking News - January 24, 2012 - (Page 1)

THE NEWS WEEKLY OF GRAIN-BASED FOODS JANUARY 24, 2012 / EDUCATION AND RESEARCH Driscoll account blames labor, many other factors for Hostess woes NEW YORK — While burdensome obligations to multiemployer pension plans have cost Hostess Brands Inc. more than $100 million a year, the company has sustained losses exceeding $100 million in each of its two full years since emerging from bankruptcy in 2009. The role of the company’s union obligations in its financial problems has been brought to Driscoll the fore in recent statements and counter statements by Hostess and union representatives (see related story on Page 15). Hostess has attributed its woes “primarily to legacy pension and medical benefit obligations and restrictive work rules.” Secondarily, the company cited the economic downturn and a more difficult competitive landscape. Calling the company’s assertions “offensive,” Frank Hurt, president of the Bakery, Confectionery, Tobacco Workers and Grain Millers International Union, said Hostess “is in dire financial shape because of a string of failed business decisions made by a series of ineffective executives who have been running this company for the past decade.” A filing with the United States Bankruptcy Court, Southern District of New York, by Brian J. Driscoll, president and chief executive officer of Hostess, paints a more complicated picture of the difficulties facing the baking company. The “Affidavit of Brian J. Driscoll in Support of First Day Motions” does Continued on Page 15 Soft wheat studies yield key findings Researchers study fiber content and best varieties to make whole grain flours Story on Page 30 LATE NEWS Bimbo in $800 million 10-year bond offering MEXICO CITY — Grupo Bimbo, S.A.B. de C.V. said it has priced its offering of $800 million of 4.50% notes due 2022, at an issue price of 99.19%, to yield 4.602%. The notes will constitute senior unsecured obligations of Grupo Bimbo and unconditionally will be guaranteed by certain of Grupo Bimbo’s subsidiaries. Grupo Bimbo said it plans to use the proceeds from the offering “to refinance existing indebtedness and for general corporate purposes.” Grupo Bimbo last issued debt in June 2010, when it sold $800 million of 4.875% of senior Continued on Page 8 WALL STREET ANALYSTS’ OUTLOOK Better near-term outlook, many challenges seen for food sector While 2012 appears to be beginning on a bright note for grain-based foods companies, the footing may be shaky ahead, according to Wall Street analysts. Coming after a year of better-thanmarket performance, on average, for shares of the packaged foods industry, major challenges facing a range of companies may come to the fore in the new year, they said. Profitability generally is expected to improve in the near term, the analysts said. “Most of the companies I follow have unique drivers of their businesses affecting their stock prices, and fundamental industry trends often do not apply individually,” said Mitchell B. Pinheiro, managing director, equity research, Janney Montgomery Scott, Philadelphia. “But I think you will have a much better year on average.” In terms of share price performance, outperformance of broader market indices will not be easy to achieve in 2012, Mr. Pinheiro said. As mature a business Continued on Page 22 Marking nine decades in partnership with grain-based foods

Table of Contents for the Digital Edition of Milling & Baking News - January 24, 2012

Milling & Baking News - January 24, 2012
Driscoll account blames labor, many other factors for Hostess woes
Late News - Bimbo in $800 million 10-year bond offering
Wall Street Analysts' Outlook - Better near-term outlook, many challenges seen for food sector
Table of Contents
News/Comment - Moving wheat studies from Europe a sign of difference
Editorial - A close look at Toyota’s entry into flour milling
Late News - Gavilon employees told company may be sold
Late News - C.P.I. for baked foods, cereal climbs 0.1%
Late News - Bread pricing mixed in December
Late News - Changes made to hard spring wheat contract
Business - Ralcorp board approves plan to spin off Post Holdings
Business - MGP Ingredients creates new holding company
Business - Kraft to cut 1,600 jobs as part of realignment, consolidation
Business - General Mills adds more whole grains to more cereals
Industry Activities - With NAMA funding, Fran Churchill named milling instructor at K.S.U.
Industry Activities - First Lady set to unveil new federal school lunch standards
Industry Activities - Nominations solicited for Milling Operative of the Year
Data - Winter wheat plantings up 3% from a year ago
Data - U.S.D.A. lowers 2012 wheat carryover forecast to 870 million bus
Business - Hostess gets go-ahead for DIP financing; union leader lashes out at management
Washington - U.S.D.A. unveils plan to close 259 offices and save $150 million annually
Financial Results - Cargill earnings drop 88% after commodity challenges
Nutrition and Health - Review finds no health risk with moderate refined grains intake
Washington - The Trans-Pacific Partnership and agriculture
People - Wendy Barth named senior v.p. of global marketing at Rich Products
People - Nelson Harris, former Tasty Baking chief executive, dies at 85
People - Ron Savelli named president and c.e.o. of Eatem Foods Corp.
People - Daryl Bashor promoted at Dakota Specialty Milling
Education and Research - Soft wheat studies yield key findings
Education and Research - Multi-million-dollar endowments to benefit Idaho ag research
Ingredient Market Trends
Ingredient Week
Supplier Innovations
Marketplace Business Network
Ad Index

Milling & Baking News - January 24, 2012