• Flowers cuts FY EPS forecast
  • Net income, EBIT down in Q2
  • Sales up but volumes fall

US baker Flowers Foods today (17 August) cut its guidance for full-year earnings after a slide in second-quarter profits.

The company said now estimates that its diluted earnings per share for 2011 could be between flat and up 5% after a 12.5% fall to US$0.21 in the 12 weeks to 16 July.

Second-quarter diluted EPS dropped 4.2% to $0.23 once costs from its May acquisition of Tasty Baking Co. were excluded from the figures.

In May, when Flowers Foods published its first-quarter results, it said it expected diluted EPS to rise by 5-10%.

The lowered forecast hit Flowers' shares, which had fallen 9.95% to $19.19 at 16:29 ET.

Second-quarter net income was down 16.4% at $28.2m, in part due to costs from the Tasty Baking acquisition but EBIT slid 15.6% to $43.1m as ingredient and packaging costs hit earnings.

Sales increased 5.7% to $642.6m but that was driven by better pricing and mix. Volumes fell 2.1%.

Chairman and CEO George Deese pointed to Flowers' "solid top-line results". He said: "Sales growth was driven by a combination of good performance in our branded retail business and the contribution from the Tasty acquisition," Deese said.

Deese said Flowers direct-store delivery business "performed well", although higher ingredient costs hit margins in its warehouse channel.

"A prolonged and slow economic recovery, compounded by higher costs, has continued to pressure consumer buying as well as business operations. While these macroeconomic factors can create short-term fluctuations in results, our team is managing through those issues by improving operations, reducing costs, and achieving the pricing necessary to keep our margins within our target range," Deese added. "Despite these pressures, we have confidence that our operating strategies are sound and our growth targets attainable over the long term."

Click here for the full statement from Flowers.