USA: Hain Celestial reports strong revenue growth in Q2
Melville, NY-based natural and organic food company, The Hain Celestial Group, has announced that net revenues for the second quarter totaled US$124.8m, an increase of almost 9% over the same quarter of the prior year on a comparable basis.
Net income was US$5.2m, or US$0.15 per share on a diluted basis, for the second quarter ended 31 December 2001. Excluding the one time Terra Chip manufacturing facility transition costs, which the Company previously announced, net income would have been US$0.21 per share.
As previously discussed, the company's earnings were impacted by approximately US$0.06 per share as a result of higher than anticipated one time transition costs associated with the start-up of production at the company's new Terra Chips manufacturing facility in Moonachie, NJ and the transition of production from the original Terra Chips facility in Brooklyn, NY. Results were further impacted by approximately US$0.07 per share, as announced earlier, with unusually warm winter weather throughout the US slowing sales and earnings growth for the Company's soups, teas and hot cereals.
Irwin D. Simon, chairman, president and CEO of Hain Celestial, said: "Our performance in the Q2 was both challenging and encouraging. While we are disappointed that the transition costs to open our new Terra Chips facility in the second quarter were higher than anticipated, this is behind us and we firmly believe that making the significant investment in our production capability is important to ensuring margin efficiencies and the long-term growth of our rocket brands such as Terra.
"In the second quarter, our rocket and other brands continued to show strong growth, with Garden of Eatin up 24%, Terra up 11% despite the transition issues, Westsoy up 11% and Westbrae up 12%. While the warm winter weather affected certain of our seasonal brands, the diversity of our brands and products allowed us to remain profitable and build upon our strong balance sheet.
"As part of our long-term strategic focus on investing in our brands, we are enhancing our consumer and trade programs on many of our rocket brands and we are pleased that, despite the continued unseasonable temperatures across the US, consumers are responding well to these initiatives. Our Celestial Seasonings brand is aggressively pursuing consumers with targeted television advertising and samples inserted in newspapers. With our new Terra facility on line, we are able to promote the brand in ways we were unable to in the past. These programs require a high initial investment, which we estimate will cost us an incremental US$0.13 to US$0.14 per share, and considering the continuing warm winter, we are therefore revising our estimates for our third quarter results to US$0.14 to US$0.17 earnings per share and a revenue increase between 15% and 20%," Simon concluded.
Hain Celestial's balance sheet continues to be strong. At the end of the second quarter, working capital totaled approximately US$73.3m with a current ratio of 2.2:1; debt to equity at 4.6%; and total equity of US$410.3m.
In early January, Hain Celestial moved its world headquarters to Melville, NY, positioning the company for continued integration of operations over the long-term.
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