Higher costs hit Lancaster Colony Q1
Lancaster earnings drop
Higher costs weighed on Lancaster Colony first-quarter earnings, which fell despite growing sales, the US company revealed today (30 October).
The pies-to-salad dressings firm said operating profit in the three months to 30 September fell to US$34.6m, down from $36.4m in the year-ago period. Operating margins were hit by higher SG&A costs, the group revealed in a regulatory filing. Net earnings were also down, dropping to $22.7m from $24.8m.
Higher costs meant Lancaster's increased sales failed to feed through to the bottom line. Net sales increased to $259.98m in the period to 30 September, up from $248.1m last year.
Chairman and CEO John Gerlach, Jr. said he was "satisfied with the sales growth for the quarter", adding the firm's investments in "innovation and on-trend product development" would support its development.
He was also upbeat on the prospects for an "improved manufacturing performance" in the back half of the year, following the completion of a dressing and sauce capacity project.
LANCASTER COLONY REPORTS FIRST QUARTER SALES AND EARNINGS
COLUMBUS, Ohio, October 30 - Lancaster Colony Corporation (Nasdaq: LANC) today reported results for the company’s first fiscal quarter ended September 30, 2014. All prior-period financial results of the Glassware and Candles segment have been reclassified as discontinued operations due to the sale of effectively all the net operating assets of that segment on January 30, 2014. Highlights for the quarter:
• Net sales reached a first quarter record of $260 million, up five percent from the prior-year level of $248 million. Sales volumes in both the retail and foodservice channels improved with dressings, dips and frozen garlic bread products noted contributors on the retail side while increased sales to national chain restaurants provided a lift for foodservice. Placement costs for new products limited retail net sales growth as did the continued impact of deflationary pricing on foodservice net sales.
• Operating income declined five percent to $34.6 million as the benefit of the higher sales volumes and modestly favorable ingredient costs were offset by higher placement costs, lower foodservice pricing and elevated freight expense. Operating margins were also pressured by increased operating costs due to our ongoing capacity constraints in dressing and sauce manufacturing. While our capacity expansion project remains on schedule for completion this calendar year, modest startup costs were recognized in the first quarter and are expected to continue through our second quarter.
• Income from continuing operations was $22.8 million compared with $24.1 million last year. Earnings per share from continuing operations were $.83 versus $.88 a year ago.
• First quarter net income also totaled $22.8 million or $.83 per share as there was no impact from discontinued operations while the prior-year net income was $24.8 million or $.91 per share, including a contribution of $0.7 million or $.03 per share from discontinued operations.
• Cash dividends were maintained at the higher rate set in November 2013. The company’s debt-free balance sheet reflected $228 million in cash and equivalents at September 30, 2014.
Chairman and CEO John B. Gerlach, Jr. said, “We were satisfied with the sales growth for the quarter and will continue to invest in innovation and on-trend product development in both the retail and foodservice channels to support our strong market positions. While we are up against some tough comparisons for our second fiscal quarter versus prior year, we look forward to the completion of our dressing and sauce capacity project that should give rise to improved manufacturing performance in the back half of the fiscal year.”
Original source: Lancaster Colony
Companies: Lancaster Colony
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