US: Baker Flowers Foods cuts FY earnings forecast
- Lowers FY EPS forecast
- Capex to increase
- Q1 profits down, sales up
Flowers Food's revised guidance contained an increase in capital expenditure
US baker Flowers Foods has cut its forecast for full-year earnings after a bond issue pushed up the company's interest charges.
The company said yesterday (24 May) it expects its adjusted earnings per share in 2012 to increase by 3.5% to 8% on last year's $0.96. In February, Flowers set a forecast for growth of 7% to 12%. However, Flowers said the new forecast did not include any "future acquisitions".
Last month, the company issued $400m of notes to pay long-term debt and set aside funds for future deals.
Flowers' revised guidance also contained an increase in capital expenditure. It now expects to spend $75-85m, including the recently-announced expansion of a bakery in Pennsylvania. Its previous forecast was $65-75m.
The group, which manufactures brands including Tastykake and Nature's Own, also reported a drop in first-quarter profits. Input costs, including ingredients and packaging, offset a rise in sales.
Net income fell 8% to $37.9m. EBIT decreased 3.7% to $59.2m. However, sales were up 12% at $898.2m thanks to last year's acquisition of Tasty Baking Co. Nevertheless, Flowers managed to increase volumes by 1.7%.
"While input costs presented headwinds in the first quarter, we were relatively pleased with our results," chairman and CEO George Deese said.
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