US: Baker Flowers forecasts return to profit growth
Flowers Foods has forecast a return to earnings growth in 2012 despite continued pressure from input costs.
The US bakery giant, which saw commodity prices hit profits in 2011, yesterday (9 February) predicted a 7-12% increase in earnings per share this year, when compared to the adjusted EPS of $0.96 it generated last year.
The $0.96 in adjusted EPS excluded costs related to last year's acquisition of regional US baker Tasty Baking Co. and from the close of a manufacturing facility.
That figure was lower than the $0.99 of EPS Flowers made in 2010. On a reported basis, including the acquisition and restructuring costs, earnings per share in 2011 was $0.90. Net income fell 9.9% to $123.4m. EBIT dropped 8.2% to $189m.
The fall in profits came despite higher sales - which increased 7.8% to $2.77bn - as ingredient and packaging costs ate into earnings.
Looking to 2012, Flowers said forecast a 6-9% increase in input costs. However, the company expects earnings to rise this year.
"For 2012, we expect sales growth of 7-9% and earnings per share growth of 7-12% from adjusted 2011 EPS of $0.96. The earnings per share guidance takes into consideration higher input costs, with the greatest impact projected for the first half of 2012," CFO Steve Kinsey said.
Chairman and CEO George Deese "cautious" about the year ahead but said Flowers could benefit from consolidation in the sector.
"We remain cautious about the near-term given the input cost pressures we face in the first half of 2012, the ongoing marketplace competitiveness, and relatively weak consumer demand. However, the confidence we have in our core business is reflected in our 2012 guidance and we expect further opportunities as the industry continues to consolidate," Deese said.
Shares in Flowers, which issued its results after the market closed in New York yesterday, were down 2.91% at 10:22 ET today.
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