Shares in US private-label group TreeHouse Foods rose today (10 February) after it met its target for fourth-quarter earnings, which the company lowered last month.
TreeHouse, which makes own-label products from jams to salsa, reported underlying earnings per share of US$0.85 for the three months to the end of December. Three weeks ago, in a profit warning, TreeHouse said its fourth-quarter EPS would be $0.84-0.87. The $0.85 in EPS compared to $0.80 a year ago. Net income increased 6.4% to $29.9m.
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Adjusted EBITDA was $82.8m, which TreeHouse said was “comparable” to a year ago. The company said “softer” volumes, higher cucumber crop costs and an “unfavourable” LIFO adjustment for pickles weighed on earnings.
The prospect of a 4% fall retail volumes in the fourth quarter had prompted last month’s warning and Treehouse confirmed the drop today. TreeHouse’s net sales increased 5.2% to $535.8m as increased pricing helped its retail revenues and sales from its industrial and export division climbed 8%.
“We believe that changing customer dynamics, continued consumer weakness, as well as unseasonably warm weather, hurt our top line in the quarter,” chairman, president and CEO Sam Reed. “Having completed a detailed review of our category margins and channels of distribution, we believe that the shift toward alternate channels like club, limited assortment and dollar stores had a secondary effect on our margins in the quarter.”
The fourth quarter ended a year in which TreeHouse’s annual EPS fell but profits and sales increased. The company said its adjusted earnings per share were $2.72 compared to $2.78 last year due to costs linked to “facility consolidation”.
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By GlobalDataHowever, TreeHouse reported a 3.8% increase in net income to $94.4m. Adjusted EBITDA climbed 6% to $300m. Net sales were up 12.8% at $2.05bn.
Reed said TreeHouse had made progress on “internal initiatives” in 2011 and insisted 2012 would be a year in which the company focused on “the day-to-day activities of executing our sales plans, driving internal cost savings and delivering increased shareholder value”.
TreeHouse is looking to acquire rivals and Reed said the company expected to be able to add to the business this year.
“In 2012, we see the food industry moderating, the acquisition environment improving, and financing staying open and available. This combination should allow us to find the right additions to our TreeHouse family of products during this new year,” Reed said.
Shares in Treehouse closed up 4.34% at $57.46 today.
