US: Q2 sales up 16% at Wrigley
Gum and confectionery group Wm. Wrigley Jr. Company has posted record sales for the second quarter of US$1.2bn, up 16%, on the back of a 21% increase in worldwide shipments.
However, consolidated net earnings for the quarter fell by $22m to $141m. Net earnings per diluted share were $0.51, which included the negative impacts of previously announced restructuring charges and new accounting requirements to expense stock options, against $0.57 for the corresponding period last year.
Diluted earnings per share for the six-month period were $0.91, down 13% from the first six months of 2005. Net sales for the six months were up 15% at $2.3bn. Consolidated operating profits for the quarter and the first six months of the year were down 7% and 8% respectively, due to restructuring charges and stock option expensing. Without those charges, the company said operating profits were up for the quarter and year-to-date, including a small positive contribution from the new confectionery brands in the current quarter.
"We remain pleased with our strong top-line growth and the continued vitality of our core gum business worldwide," said chairman, president and CEO Bill Wrigley, Jr. "Given the dynamic, competitive nature of the marketplace and the need to improve margins, we are taking aggressive steps to improve our performance to ensure that more of that top-line success translates into stronger bottom-line results."
Wrigley added that plans were already underway to focus investments where they will have the most impact, streamline operations, and better align the company's management team in order to "fully leverage our global presence and market share leadership positions".
Global gum shipments rose by 8% in the quarter, with the company gaining market share in the gum sector in a number of key markets, including France and Canada. Wrigley said it also extended its leadership in China, while also gaining momentum in India.
Wrigley acquired the Altoids, Life Savers, Creme Savers and Sugus brands last summer as part of its strategy to become a broader-based confectionery company. The company said the acquired confectionery brands accounted for just over half of the 16% quarterly sales gain, adding that the integration of those brands into the company's overall structure was almost complete.
On a region-by-region basis, Asia continued to deliver strong sales growth, the company said, recording a 26% rise in sales on a 22% shipment increase, with the biggest contribution to sales growth coming from China.
Sales in Europe, Middle East and India rose by 7% with shipments up 8%. Although sales in North America were up by 28%, the majority of the gains came from the acquired confectionery brands.
In the US, sales of Wrigley's core business rose by 3% on the back of a 4% increase in volume. The company added that following its 8 share point gain in the US gum market over the past five years, it is now seeing increased new product development and promotional activity from its competitors.
"We are taking a very intentional approach to addressing both opportunities and challenges in the US, and are confident in the strength and quality of product and marketing initiatives that are currently rolling out into the marketplace," Wrigley said.
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