Katy Askew

On the money: Bullish Hain looks to leverage health and wellness

By Katy Askew | 2 November 2012

Hain to export US know-how to UK market

Hain to export US know-how to UK market

US speciality food group Hain Celestial sounded a bullish note on the prospects for both its domestic and international businesses as it focuses on leveraging its health and wellness credentials.

The company, which booked a 25.4% jump in first-quarter sales yesterday (1 November), said sales in the US were benefiting from higher demand and improved access to mainstream retail channels. Domestic sales in the three months totalled US$252.6m, up 8.1% versus a year ago

"We continue to be very bullish about our US business," US CEO John Carroll told analysts during a conference call. "We see strong momentum across the business and like I said before, it's sustainable," he insisted.

Carroll said growth in the US is being driven by four factors: "continued" US consumption gain; progress filling the "distribution wide space with our reorganised sales group"; initiatives to increase capacity for "fast-growing" MaraNatha and Earth's Best; and continued innovation.

Overseas, Hain management said the group expects to benefit from growing international health and wellness trends as well as recent acquisitions.

In the UK, Hain completed the acquisition of various brands - including Hartley's, Sun-Pat and Robertson's - from Premier Foods plc in the UK. This business saw branded volume growth of 7% in the quarter and is expected to be earnings accreditive to Hain's full-year numbers.

The company said it expects to benefit from bringing brands and product know-how developed in the US to the UK.

"I have spent some time over the last couple weeks [in the UK]," Hain founder and group CEO Irwin Simon revealed. "There is so much we could do. I happened to get a chance to visit a few UK retailers. One UK retailer says: "hey, we're behind the health and wellness trend in the US. With Hain's depth and breath of products, can you help us with a lot of health and wellness products just even with gluten-free, non-dairy, lower sodium [to name] just a few". So we are absolutely looking to do that and being a bigger player now in the grocery side of the business."

Rob Burnett, CEO of Hain's UK unit Hain Daniels, added that the group expects to "complement the acquired business... by building up a portfolio US Hain brands in UK grocery".

Burnett said: "The UK demand for healthier food and drink alternatives is gathering pace and we are well-positioned to capitalize on Hain US and Canada experience to lead the way in the UK."

According to BMO Capital Markets analyst Amit Sharma, even though Hain's EPS came in "modestly below our estimates", the prospects for the business are viewed as positive.

"The continuation of strong consumption growth and distribution gains in the US coupled with encouraging trends in the UK confirms our view that the recent concerns regarding the sustainability of Hain's top-line growth trajectory were overblown," he wrote in a note to investors.

Likewise, BB&T Capital Markets analyst Andrew Wolf, suggested that Hain should be able to "grow rapidly by exploiting its leading position in the natural food space".

"US operations continued to contribute the vast majority of the top and bottom line gains complimented by solid results in Canada and Europe. In the UK profit dollar change was flat in the seasonally low Q1, but with the high-margin Premiere brands acquisition on board should show solid contribution going forward," Wolf predicted.  

Sectors: Chilled foods, Condiments, dressings & sauces, Dairy, Financials, Fresh produce, Health & wellness, Snacks

Companies: Hain Celestial, Premier Foods plc

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