Dutch organic food group Wessanen has warned of declining second-quarter profits, with a sharp drop in demand hitting US subsidiary ABC.
In an announcement today (17 July), Wessanen said operating profit in the second quarter is expected to total EUR4.8m (US$6.3m), down from EUR6.2m last year.
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Profits have been dented by one-off costs associated with the restructuring of its European grocery business as well as significant drop in sales at ABC in the US. Exceptional items totalled EUR1.3m in the quarter, the company revealed.
Last year, Wessanen implemented a turnaround plan to boost productivity in the face of falling demand. In Europe, the group said operations were performing according to plan. However, in the US Wessanen warned that ABC – which manufactures Little Hug and Daily’s frozen fruit drinks – is expected to incur a loss for the year despite “immediate short term corrective actions”.
“The decline of the frozen pouches segment has resulted in lower volumes at Daily’s, under-utilisation of production facilities and inventory write-downs,” the company explained.
Wessanen is due to provide a full second-quarter update next week (25 July).
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