US: TreeHouse: "signs of life" for industry volumes

By Dean Best | 14 February 2014

TreeHouse CEO Reed signalled firm set to make more acquisitions this year

TreeHouse CEO Reed signalled firm set to make more acquisitions this year

The CEO of US brand and private-label group TreeHouse Foods has claimed sales volumes in the country's food and beverage are showing signs of improving.

"After two challenging years in the grocery landscape, food and beverage industry volumes have begun to show signs of life," TreeHouse chairman, president and CEO Sam Reed said.

Reed's comments came as TreeHouse filed its 2013 results - and he also underlines the company's desire to make more acquisitions this year.

"No matter what the retail environment will bring, we remain steadfast in our commitment to expanding our private-label footprint, manufacturing custom products and delighting our customers. We are very well positioned to continue expanding our private label portfolio through strategic acquisitions in 2014, as the environment continues to gather steam and our appetite for deals is robust," Reed said.

Deals in the last year or so helped boost TreeHouse's top line. The company acquired dressings and mayonnaise firm Cains Foods in June. Four months later, TreeHouse's move to buy cheese and pudding assets owned by dairy co-op Associated Milk Producers, struck in December in 2012, was also finalised.

TreeHouse's net sales grew 5.1% in 2013 to $2.29bn. Operating income inched up 0.8% to $178.2m. Net income dipped 1.6% to $87m on a higher tax bill.

However, TreeHouse said its adjusted earnings per share, which excluded costs for restructuring and M&A, rose from $2.79 in 2012 to $3.19.

The company anticipates sales growth of 9-10% in 2014, driven primarily by the full-year impact of the Cains Foods and Associated Brands acquisitions.

It expects adjusted earnings per fully diluted share to grow by 10-13% to $3.50-$3.60.

BB&T Capital Markets analyst Brett Hundley said TreeHouse's guidance for 2014 was "slightly below" his forecast.

However, he added: "It includes a number of non-operating items that we had not previously expected; thus, underlying business conditions are better than we had hoped. TreeHouse also signaled strongly that it will be involved in M&A during 2014. Our price target drops to $80 from $83. However, our conviction level on the shares remains high."

Sectors: Canned food, Condiments, dressings & sauces, Dried foods, Financials, Private label, World foods

Companies: TreeHouse Foods

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