US packaged bakery foods company Flowers Foods has reported lower quarterly net income, due to share price compensation expenses and higher commodity costs.

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The company reported net income of US$7.5m, or 17 cents per share, for the 12-week fourth quarter ended 1 January 2005, compared to $17.2m, or 37 cents per share, for the 13-week fourth quarter of fiscal 2003.


Full-year net income was $50.8m, or $1.13 per share, compared to $14.7m, or 32 cents per share, for the previous year. Fiscal 2003 contained one more week than fiscal 2004. Income from continuing operations for fiscal 2004 was $54.3m, or $1.21 per share, compared to $52.8m, or $1.15 per share, for fiscal 2003.


Flowers Foods said results are in line with guidance the company provided on 10 January 2005, which noted that a more than 20% increase in Flowers Foods’ stock price over the final two months of the fiscal year required higher compensation expense associated with the company’s stock appreciation rights plan. The company also experienced higher compliance and commodity costs.


Sales for the fourth quarter increased 3.8% to $361.4m. Price increases and a favourable product mix accounted for 6.4% of the increase. Volume decreased 3.5%.

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Sales for fiscal 2004 increased 6.8% to $1.55bn. Price increases and a favourable mix accounted for 3.4% of the increase. Volume increased 2.5% even though fiscal 2004 contained one less week.


“Our sales increase for the year shows the strength of our brands and products as well as the outstanding efforts of our team. We expect continued good performance in the marketplace, as our guidance for 2005 indicates. The company continues to generate strong cash flow, which allows us to pay dividends, repurchase shares when appropriate, make acquisitions, and fund internal growth as we work to build long-term value for our shareholders,” said president and CEO George Deese.


The company reaffirmed its prior fiscal 2005 guidance of $1.60bn to $1.625bn in sales, and net income of approximately 3.75% to 4.0% of sales.