CANADA: Acquisition boosts Lassonde H1 profits
By Michelle Russell | 13 August 2012
- Net profit up 64%
- Operating profit climbs 55.8%
- Sales increase 74.6%
Canadian food and drink manufacturer Lassonde Industries has booked an increase in first-half profits.
In the six months to the end of June, earnings climbed 16.8% to C$21.6m (US$21.7m). The acquisition of juice firm Clement and Pappas & Co contributed to profit in the period and offset acquisition-related costs, the company said.
Operating profit in the period totalled C$33.8m, an 55.8% increase on the prior-year period.
Sales increased 75% in the six-month period to total C$279.9m.
Lassonde Industries Inc. announces its Q2 2012 results
ROUGEMONT, QC, Aug. 10, 2012 /CNW Telbec/ - Lassonde Industries Inc. (TSX: LAS.A) (Lassonde) posted sales of $256.4 million in the second quarter of 2012, a 74.6% increase year over year. Profit attributable to the Company's shareholders for this period totalled $10.5 million, up $4.1 million from the second quarter of 2011. Note that the total favourable impact of the Clement Pappas and Company, Inc. (CPC) contribution to the profit attributable to the Company's shareholders of this quarter was approximately $1.1 million. In addition, acquisition-related costs had an unfavourable impact of $1.9 million on the second-quarter profit of 2011.
"The results for the second quarter of 2012 have met our expectations. Our new products have helped us sustain growth in a market that continues to be impacted by high raw material costs. As for the integration of Clement Pappas, we are on the right track and making good progress in achieving synergies, despite the lower volumes being seen across the entire U.S. fruit juice and drink industry. Between the acquisition date and June 30, 2012, we repaid US$28.4 million in long-term debt of Clement Pappas," said Pierre-Paul Lassonde, Chairman of the Board and Chief Executive Officer of Lassonde Industries Inc.
The Company's sales totalled $256.4 million in the second quarter of 2012, up $109.5 million or 74.6% from sales of $146.9 million in the same period of 2011. Sales from CPC added $96.7 million to the second-quarter sales of 2012. Excluding CPC's sales, the Company's second-quarter sales were up $12.8 million (8.8%) from the same quarter last year. This increase was driven by higher sales volumes for national brands. The favourable impact of price increases introduced in response to higher raw material costs was offset by lower sales volumes in private labels. For the first six months of 2012, sales totalled $489.8 million, up 75.0% from $279.9 million in the first six months of 2011.
The Company's operating profit for the second quarter of 2012 totalled $20.7 million, up $9.6 million from operating profit of $11.1 million in the same quarter last year. Excluding the impact of the CPC acquisition, second-quarter operating profit was up $2.5 million year over year, mainly due to the positive impact of additional sales volume on profit margin and to a $1.5 million gain on the sale of property, plant and equipment. During the second quarter of 2012, the impact of higher raw material costs on profit margin was offset by the impact of higher selling prices. As for CPC, its second-quarter operating profit totalled $7.1 million. Operating profit for the first six months of 2012 stood at $33.8 million, up $12.1 million from $21.7 million at the end of the first six months of 2011.
The Company's financial expenses went from $1.1 million in the second quarter of 2011 to $6.0 million in this second quarter. This increase was mostly attributable to the interest expenses on the total debt incurred to effect the CPC acquisition. "Other (gains) losses" went from a $0.9 million loss in the second quarter of 2011 to a $1.0 million loss in the second quarter of 2012. The 2012 second-quarter loss was primarily due to a $1.1 million loss from a change in the fair value of interest rate swaps and to a $0.4 million gain on an insurance claim. The 2011 loss was essentially due to a change in the conversion rate of a bank balance of US$70 million held to effect the CPC acquisition. For the first six months, financial expenses went from $2.2 million in 2011 to $10.4 million this fiscal year, and "Other (gains) losses" was a $1.8 million loss in 2012 compared to a $1.0 million loss in 2011.
Profit before income taxes totalled $13.7 million for the second quarter of 2012, up $4.7 million from $9.0 million in the same quarter last year. For the first six months of fiscal 2012, profit before income taxes stood at $21.6 million, up 16.8% from $18.5 million in the first six months of 2011.
An income tax expense at an effective rate of 22.4% (28.9% in 2011) brought the 2012 second-quarter profit to $10.6 million, up $4.2 million from $6.4 million in the same quarter of 2011. Profit attributable to the Company's shareholders was $10.5 million, resulting in basic and diluted earnings per share of $1.50 for the second quarter of 2012. This amount reflects the allocation of a portion of CPC's profit to a non-controlling interest. In the second quarter of 2011, profit attributable to the Company's shareholders had totalled $6.4 million, resulting in basic and diluted earnings per share of $0.97. For the first six months of 2012, profit attributable to the Company's shareholders totalled $16.1 million, resulting in basic and diluted earnings per share of $2.30 and, in the same six-month period of 2011, profit totalled $13.1 million, resulting in basic and diluted earnings per share of $2.00.
The condensed consolidated statement of cash flows shows that operating activities generated $32.8 million in cash in the second quarter of 2012 compared to $2.1 million in cash in the same period last year. During the second quarter of 2012, CPC's operating activities generated $10.1 million, leaving a difference of $20.6 million on a comparative basis. Financing activities used $20.6 million in the second quarter of 2012, including $4.7 million attributable to CPC, leaving a difference of $19.9 million on a comparative basis; this was almost entirely attributable to repayments of bank indebtedness in the second quarter of fiscal 2012. Investing activities used $5.4 million in the second quarter of 2012, of which $1.3 million was attributable to CPC, leaving a $0.6 million increase on a comparative basis. At the end of the second quarter of 2012, cash and cash equivalents stood at $0.7 million compared to $58.4 million at the end of the second quarter of 2011.
Outlook During the second quarter of 2012, the Company saw a continuation in the decline of the cumulative sales volumes of U.S. fruit juice and drink producers. This trend was particularly true for apple juice sales, which seem to have been affected by the higher prices made necessary by higher concentrate costs. The Canadian market appears to be faring better with these price fluctuations, with producers not experiencing as significant an impact on their cumulative volumes.
Fiscal 2012 will include an entire year of CPC's financial results. To better understand the impact of this acquisition, it is important to note that CPC recorded, for the 12 months ended October 1, 2011, sales of approximately US$400 million and adjusted EBITDA of approximately US$58 million. The Company believes that CPC's 2012 sales will be slightly higher when compared to the twelve-month period ended October 1, 2011 while its EBITDA may decline between US$3-to-5 million due to lower volumes in the U.S. industry. For its Canadian entities, Lassonde Industries Inc. anticipates slightly higher sales than those of 2011.
The Company does not plan on making major changes to its business model in fiscal 2012 and will focus on the integration of CPC.
Original source: Lassonde Industries
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CANADA: Acquisition boosts Lassonde H1 profits
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