USA: Horizon Organic Holding Corp. lowers earnings estimates for fiscal 2000 fourth quarter and year: confirms guidance for 2001
"We are very pleased with the progress we are making in the U.S., as indicated by the fact that US operations were profitable and basically on target in the fourth quarter," said Charles (Chuck) F. Marcy, president and chief executive officer of Horizon Organic. "We have resolved capacity constraints related to the production of ultra-pasteurized (UP) milk and can now meet the high demand. We are getting our costs under control, including reducing the cost of raw milk supply. Importantly, we have made the strategic decision to make no further long-term investments in farms and have decided to sell the land that we purchased in California last year. Now we need to focus our attention on the companies we acquired in the U.K. in June of last year."
As previously reported, Horizon Organic lost a major U.K. customer after its acquisition of Meadow Farms Ltd. The company also has experienced slower sales growth in the U.K. than anticipated. As a result, operating income is not sufficient to cover interest and goodwill expenses associated with the recently acquired companies.
Horizon Organic is aggressively addressing these issues by implementing a restructuring plan, enhancing distribution of its products and marketing Horizon Organic branded products beyond specialty stores in London. The company is streamlining its management structure to allow Marcy to be more directly involved in U.K. operations. He will reduce his direct reports in the U.S. and has appointed Don Gaidano as Managing Director of U.K. operations.
Additionally, the company is focusing efforts on expanding its direct store delivery programs to improve distribution with major UK retailers. The company also has committed to additional marketing expenditures in order to establish Horizon Organic branded products beyond the specialty stores in London, where they primarily are available today. These expenditures will support Horizon Organic milk introduced in December and also a new Horizon Organic branded yogurt which will ship in the first quarter of this year. Sainsbury's and Safeway in the U.K. have agreed to sell the new yogurt products.
"In addition to being more efficient, the restructuring plan will help to reduce overhead and allow us to focus on those initiatives that can truly drive the business," stated Marcy. "We also believe we are on track to meet 2001 estimates and are comfortable with current analysis projections of $0.20-$0.22 earnings per share," added Marcy.
Horizon Organic produces and markets the leading brand of certified organic milk and a full line of refrigerated, certified organic dairy products. The company also markets certified organic eggs and juices. Horizon Organic products can be found in conventional supermarkets and natural foods stores across the U.S. and in the U.K. For more information, please visit the Company's web site at www.horizonorganic.com.
Note on Forward-Looking Statements: This news release contains forward- looking statements that involve risks and uncertainties. Future events may differ materially from those discussed herein, due to a number of factors, including uncertainties related to the company's ability to continue strong growth, to achieve distribution and operational efficiencies, and to expand domestically and internationally, as well as increased milk costs, inbound and outbound freight and distribution costs, higher costs related to new-product introductions and increased personnel costs. These factors and others are more fully discussed in the company's Annual Report on Form 10-K for the year ended December 31, 1999.
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