Snyder's-Lance, the US snacks group that today (28 October) announced a deal to buy Kettle Chips maker Diamond Foods, has cut its sales and earnings forecasts after reporting mixed results in its third quarter.
Alongside the US$1.91bn cash-and-shares deal, the Cape Cod crisps maker announced its third-quarter numbers, results the company said had led it to reappraise its estimates for the full year.
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Snyder's-Lance now expects its net revenue to hit U$1.68-1.7bn, down from its earlier guidance of $1.69-1.72bn. The company also lowered its forecast for earnings per share. It sees earnings hitting $1.11-1.19 per share, compared to its previous forecast of $1.07-1.12.
Third-quarter sales and earnings missed analyst expectations. Snyder's-Lance reported a 1.8% increase in net revenue to $416.8m for the third quarter ended 3 October, a sharp deceleration in the growth the company had seen in the second quarter, when its top line grew 8%. Analysts expected sales of $436.5m.
The firm reported a profit excluding special items – such as after-tax litigation expenses – of $18.6m compared with $16.4m a year earlier. Earnings per share of $0.26 missed analyst consensus by $0.07. Earnings before interest and tax fell to $25.1m from $26.5m on the back of higher cost of goods sold.
Snyder's-Lance booked reported net income of US$15.7m, compared to $137.8m a year earlier when the bottom line was boosted by income from now discontinued operations. Income from continuing operations increased from $13.7m to $15.7m.
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By GlobalDataFor the nine-month period net profit excluding special items increased to $49.7m from $44m. EBIT was higher at $73.9m from $60.6m.
Sales increased to $1.25bn from $1.18bn.
President and CEO Carl Lee Jr said Snyder's-Lance had seen some "short-term challenges" in the third quarter but added: "Overall, we delivered year over year growth and gained share in all five core brands in spite of retailer consolidations, a softer back-to-school selling season and significant challenges in the mass merchandiser channel.
"With a clear focus on top line growth and cost savings, we look forward to driving more positive near term results and moving forward with increased momentum. I am confident in our ability to deliver positive results as we continue the work to complete the acquisition of Diamond Foods."
