US own-label firm TreeHouse Foods has insisted its soups unit remains a “vital” part of the business despite its decision to close a production facility.

The firm this morning (8 August) cut its full-year earnings forecast as it announced plans to shut a soup plant in Mendota in Illinois. TreeHouse blamed declining soup sales on the decision to close the factory. It also announced plans to close a salad dressings facility in Canada.

CEO Sam Reed said “idle capacity” and “limited growth opportunities” and made TreeHouse’s soup operations “untenable” in its present state.

“These factors compel us to right-size our business model. This will allow us to reposition our soup business which will remain an important part of our portfolio,” Reed told analysts on the company’s conference call for its first-half results.

CFO Dennis Riordan said there were three main factors that had resulted in the closure of the facility.

“The first is our decision to move away from branded contract packing as the economics there have deteriorated. The second is that when you take that business out and you look at the infrastructure … at the time we bought it, it was one-third of our production operations … now it is no longer is tenable, especially as we have invested in our Pittsburgh plant.”

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Riordan said the company is also anticipating a “substantial” loss of volume from one customer, which it did not name, that he said has “modified their approach toward private label soup”.

While he said Treehouse will continue to supply the major customer, it was no longer their exclusive supplier.

Reed added: “Soup remains a vital element within our product portfolio but when one looks at the overall dynamics, the single factor that struck me the most is that canned soup sales across North America market are down and we need to react to those changes and in the same way we have purchased businesses to gain access into businesses.”

Separately, Reed said the company would continue to look for acquisition opportunities.

“We will make the best of hard times through a duel strategy of external expansion and internal growth allowing our TreeHouse to grow. This agenda requires that we reset our expansion plans to include organic growth and bolt-on acquisitions as sources of growth in parallel to larger acquisitions to help us grow our private label business. There will be more to come, we are after all TreeHouse, growing strong, standing tall.”