USA: American Italian Pasta posts Q3 loss
US food company American Italian Pasta has reported a third-quarter net loss as its operations were hit by the low-carbohydrate diet trend in the US.
The company posted a net loss of US$0.5m, or 3 cents per share, for the third fiscal quarter to 2 July, compared to net income of $12.0m, or 65 cents per share, in the year-ago period.
American Italian Pasta said its results included $9.9m of expenses ($6.5m after tax) related to restructuring, inventory reduction, new product introduction and development, and marketing. The company has been struggling with a downturn in sales caused by the popularity of low-carb diets in the US.
The company said the pasta industry continued to experience significant changes that have been seen over the last 12-14 months, with US pasta consumption continuing to decrease as a result of changes in diet trends. American Italian said retail consumption of dry pasta (as measured by ACNielsen) declined by 5% in volume for the 13 weeks ended 10 July 2004.
Chairman Horst W. Schroeder said the company's restructuring programme, aimed at cutting costs in the face of current industry trends, is on track.
"The competitive environment of the pasta industry, characterised by declining volumes, excess capacity and aggressive pricing, continues to negatively impact our performance and profitability," added CEO Tim Webster.
Webster said the company expects to continue to incur higher operating costs during the transition period before its new operating strategies are fully implemented.
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