Kansas City, Mo.-based Interstate Bakeries Corporation (IBC), the largest baker and distributor of fresh branded bread and cakes in the US, has reported earnings per diluted share of US$0.45 for the Q4 ended 1 June 2002, up 50% year on year. Net sales for the quarter increased 2.3% over a year ago.
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Q4 highlights:
*Net sales of US$832.97m in comparison to the prior year’s US$814.31m.
*Operating income of US$43.36m, or 5.2% of net sales, up from US$35.3m (4.3%) in Q4 2001.
*Net income of US$22m, or 2.6% of net sales, up from US$15.1m (1.9%) in Q4 2001.
*Earnings per diluted share of uS$0.45 compared to the prior year’s US$0.30.
FY 2002 results:
*Net sales of US$3.53bn, up 1.6% on the prior year’s US$3.47bn.
*Operating income before other charges of US$173m, or 4.9% of net sales, up on US$147m (4.2%) year on year.
*Operating income after other charges of US$147.36m.
*Net income of US$69.79m, or 2% of net sales, compared to US$61m (1.8%) in FY 2001.
*Earnings per diluted share before other charges of US$1.67, up from US$1.13 in FY 2001.
*Earnings per diluted share after other charges of US$1.36.
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By GlobalData“The quarter’s strong results were driven by the year’s best quarterly sales performance and continued improvement in plant efficiencies, especially at our newer bakeries. These improvements were in addition to the already successful changes made to our products that have improved our product quality and allowed us to achieve significant cost reductions in multiple areas of our business,” chairman and CEO Charles A. Sullivan said.
Sullivan credited the gain in net sales to increased sales volume rather than pricing. Q4 net unit sales increased 2.4% versus last year, while branded unit sales increased 2.9%.
Sullivan also noted a continued expansion of IBC’s national market share. Sullivan said considerable credit for gains in profitability could be directly linked to the company’s aggressive expense management programmes, improved productivity through long-term capital investment in new bakeries and major plant upgrades and introduction of the extended shelf life programme (ESL) to all IBC product lines.
“ESL has significantly impacted our bottom line by increasing customer sell-through while reducing distribution cost per dollar of sales. We now operate with over 10% fewer sales distribution routes than we did two years ago. We have improved customer service by more effectively maintaining fully stocked shelves and reduced return product from double to single digits as a percent of gross sales,” Sullivan said. “ESL is giving us far more productivity per route than we have ever experienced.”
Looking forward, Sullivan said the elements are in place to continue to achieve modest growth and improved margins which should enhance shareholder value: “We expect the year to be challenging, but over the past few years we’ve invested considerable capital in our bakery infrastructure and have implemented product innovations as the foundation of our long-term growth strategies. Today, we are seeing the early results of these strategies and expect to build on them.”
Sullivan admitted that there is no room for complacency in today’s tough business environment. He said IBC would continue controlling operational costs, realigning distribution routes to capture better overall route productivity and increasing volume through expansion of popular bakery products, including new products, and design of more effective and selective promotional programmes.
