Hillshire Brands See Sales Up Income Down01 November 2013
US - The Hillshire Brands Company saw net sales increased by one per cent to $984 million in the first quarter of the 2014 financial year compared to the previous year’s first quarter.
Adjusted operating income was $76 million, down 24.4 per cent compared to the prior year’s 76.5 per cent increase, reflecting significant input cost inflation in the quarter and unusually low SG&A in the prior year.
Reported operating income was down 35.2 per cent
Adjusted diluted EPS was $0.35 down 28.6 per cent compared to the previous year’s 88.5 per cent increase; reported diluted EPS of $0.23 down 42.5 per cent
“I’m pleased to report a solid start to the year,” said Sean Connolly, president and chief executive officer of The Hillshire Brands Company.
“Although input cost inflation has been significantly higher than anticipated, we continue to make good progress with our brand-building efforts. In particular, I’m encouraged by the overall strong consumption trends we’ve seen.
“As we’ve moved into the second quarter, we’ve begun to take additional pricing actions. While this will pressure volumes as consumers adapt to higher price points, we still expect sales trends to improve in the second half behind a robust innovation slate.
“We also still expect gross margins to improve in the second half, fuelled by both our
pricing actions and our cost efficiency programs. Accordingly, our full year guidance remains unchanged at this time.”
The company’s fiscal 2014 guidance remains unchanged at this time.
For the full year, sales are expected to increase slightly as back-half innovation helps offset expected softness associated with consumers adapting to higher price points.
Adjusted diluted EPS is expected to be flat to down mid-single digits as inflationary input costs are partially offset by pricing and cost savings programmes.
The company expects an effective tax rate of 35 per cent, net interest expense of $40 million, and corporate expenses of approximately $60 million, excluding significant items.
The company continues to forecast material input cost inflation through the remainder of the first half of fiscal 2014.
The company now expects this trend to continue throughout the second half of the year.
Despite this expectation, the company still anticipates margins will improve in the second half behind pricing actions and continued progress on cost initiatives
TheMeatSite News Desk