Flowers Foods "not satisfied" with Q4 but upbeat on 2016
Flowers expects lift in sales, earnings in 2016
Flowers Foods has said it is "not satisfied" with its fourth-quarter performance, despite the US baker reporting higher sales and earnings for the full-year - but the company forecast a jump in revenue and profit during 2016.
The company booked an increase in full-year reported sales, which rose 0.8% to US$3.77bn from $3.75bn in 2015. Reported operating profit increased to $297.88m versus $275.4m while net earnings rose to $1891.1m from $175.7m. Reported sales were lifted by an extra selling week and impacted by the performance of acquired businesses. On an adjusted basis sales rose 1.2%, EBITDA increased 2.7% and net income rose 2.2%.
However, CEO Allen Shiver said that Flowers was disappointed by its fourth-quarter performance when reported sales dropped 2.2% to $858.4m and adjusted EBITDA decreased 6.7% to $86.7m.
"We are not satisfied with our performance in the fourth quarter... While we continued to make significant progress on our strategic initiatives, our earnings in the fourth quarter were impacted by sales that were below plan. In line with channel data for the total store, the pace of Flowers' retail sales in the fourth quarter slowed relative to trends we observed in the first three quarters. Due to the lower than anticipated sales, our earnings for the quarter were negatively impacted by approximately $0.03 per share. Additionally, certain costs originally planned for the first quarter of 2016 were incurred in the fourth quarter of 2015, impacting EPS by $0.01."
Nevertheless, Shiver said 2015 was a "strong" year for Flowers and the acquisitions of Dave's Killer Bread and Alpine Valley Bread left the firm well-positioned for 2016. "While we did not meet our fourth quarter objectives, fiscal 2015 was a strong year for Flowers. Looking ahead, recently completed acquisitions, which are a core part of our growth strategy, are expected to contribute between 5.2% and 5.7% to sales growth in 2016. And with our strong brands we are working to grow share in expansion markets while remaining a low-cost producer. The team remains keenly focused on executing our growth strategies and delivering shareholder value," he said.
The company forecast 2016 sales in the range of $3.99-4.08bn, representing growth of approximately 5.5% to 8%. Earnings per share are forecast to rise to $0.98 to $1.04, representing a year-on-year increase of 6.5-13%.
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