USA: Low-carb diets hit Riviana's Q2 earnings
US rice firm Riviana Foods has reported lower quarterly profits, as consumers shunned rice in favour of low-carbohydrate foods.
The company posted earnings of US$5.9m, or 40 cents per share, for the second quarter to 28 December, compared to $8.5m, or 58 cents per share, a year earlier.
Sales increased to $110.0m, from $98.2m a year ago, while operating income was $7.7m, down from $9.2m in the year-ago period.
For the first six months of its fiscal year, Riviana earned $11.7m, or 79 cents per share, on sales of $214.4m. This compares to earnings of $14.8m, or $1.02 per share, on sales of $193.4m, for the first six months of fiscal 2003.
Riviana said its domestic rice business reported lower results for the second quarter, primarily due to changing dietary trends related to the popularity of low-carbohydrate diets, and significantly higher rice costs. Retail regular rice volume sales were down 9% and high-margin instant and prepared rice categories were also down 9%.
"Volume declines mirrored declines in the retail rice category as measured by A.C. Nielsen and are similar to those impacting pasta and potato consumption as a result of the growing influence of low-carbohydrate diets," the company said.
CEO Joseph A. Hafner, Jr. said the company expected the significant negative volume impact of low-carbohydrate diets to continue to considerably impact its business. "We and other affected food marketers have yet to come up with an effective strategy to counteract these debatable diet plans," he said.
Riviana added that the completion of its new joint venture in the UK with Spanish food company Ebro Puleva has been postponed until sometime in the fiscal third quarter due only to finalisation of documents.
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