Milling & Baking News - September 25, 2018 - 13

Financial Results

offset by increases in the Asia, Middle East
and Africa region. Constant-currency net
sales for Häagen-Dazs Japan fell 14%.
Asked during the call about pricing
prospects for the balance of the year, Mr.
Harmening offered a number of reasons
to expect the company would be able to
raise prices.
"We're actually seeing quite a bit of inflation for the industry, and we're seeing
it in a number of areas," Mr. Harmening
said. "So we're seeing it in raw material.

We're seeing it in logistics. We're seeing it
in wage increases. And our retailers are
seeing the same things...
"I think that actually explains why we're
seeing a little bit of pricing in the market
because both we as manufacturers and our
retail customers are all seeing their costs go
up on a variety of fronts. As we look into the
future, we'll continue to work all levers of
price realization. So whether that's list pricing or trade or sizing or what have you, we
will look at all the different elements." MBN

Momentum in food service spurs
full-year results at Lancaster
WESTERVILLE, OHIO - Strong momentum in the company's food service operations during the fourth quarter propelled
full-year earnings and sales at Lancaster
Colony Corp.
Net income in the year ended June 30
totaled $135,314,000, equal to $4.93 per
share on the common stock, up 17% from
$115,314,000, or $4.21 per share, in the
same period a year ago.
Last year's results were
affected adversely by a
multi-employer pension
plan withdrawal charge
that reduced income by about $11.5 million.
Net sales increased to $1,222,925,000
from $1,201,842,000.
In the fourth quarter ended June 30,
net income was $32,387,000, or $1.18 per
share, up 14% from $28,487,000, or $1.04
per share, in the same period a year ago.
Net sales totaled $308,170,000, up from
$289,874,000.
"We were pleased to report record net
sales for fiscal 2018, a year that ended with
strong momentum in our Foodservice segment and continued progress from our net
price realization initiatives in the Retail
segment," said David A. Ciesinski, chief
executive officer. "We also added to our
successful offerings of shelf-stable dressings and sauces sold under license agreements in the retail channel. Cost inflation
was against us the entire year, with both
commodities and freight rates significantly higher, but we worked to offset those
costs through both pricing actions and our
lean six sigma cost savings program. We
finished the year encouraged to see our efforts to overcome inflationary costs effectively taking hold."
Operating income in the Retail segment
totaled $126,391,000 in fiscal 2018, down
9% from $138,470,000 in fiscal 2017. Sales,
meanwhile, increased to $650,234,000
from $641,417,000. Lancaster Colony
said sales were driven in part by incremental sales from the Angelic Bakehouse
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business acquired in November 2016, as
well as pricing actions, reduced trade
spending and lower coupon expense.
In the Foodservice unit, operating income in fiscal 2018 fell 12% to $58,432,000
from $66,216,000 while sales increased to
$572,691,000 from $560,425,000.
Looking ahead to fiscal 2019, Mr. Ciesinski said retail sales should benefit from
new product introductions, including a fresh
lineup of 60-calorie
Flatout flatbread wraps
and Angelic Bakehouse
non-G.M.O. sprouted grain wraps in flavors including kale and spinach, beet and
sweet potato.
The company has forecast fiscal 2019
capital expenditures at $60 million to $80
million. Mr. Ciesinski said Lancaster has
identified three significant projects that
will drive long-term benefits. He expanded on the projects during an Aug. 23 conference call with securities analysts.
"The first project is a material capacity
expansion for our Sister Schubert's business," he said. "This project will not only
help the continued growth of our retail
business but also position us to meet the
increasing demand from one of our key
food service customers.
"The second strategic project is a new
high-speed bottling line that will be installed at our dressing and sauce facility in
Columbus, Ohio. This project will enable
us to insource retail dressing volume that's
currently co-packed and also provide us
with added capacity for future growth.
"The third strategic project is a new
innovation center that's planned for construction in the Columbus area. This facility will enable us to bring retail and food
service R.&D. teams and our quality team
altogether in one central location to more
effectively collaborate within our organization, but also with our retail and food
service partners. We believe innovation is
the key to our success." MBN

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Milling & Baking News

September 25, 2018 / 13

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