Armanino Foods of Distinction - negative forecast

Armanino Foods of Distinction - negative forecast

US speciality food manufacturer Armanino Foods of Distinction has said it expecting to post a loss in the second quarter as a result of Covid-19.

The California business, which manufactures frozen Italian speciality items including meatballs, Alfredo sauce, pesto and pasta, said the major impact on its business has been the demise of the foodservice channel with most operators being closed down to halt the spread of the virus.

Tim Anderson, the company's president and CEO, said: "Due to the worldwide impact from the Covid-19 outbreak, we anticipate that in Q2, for the first time in the past 67 quarters, we will report a quarterly net loss. The majority of our sales are driven by customers who provide products to institutions which serve food away from home. This segment has been significantly impacted by the pandemic as shelter in place orders were instituted across the US, and in many parts of our markets in Asia."

But Anderson said other parts of its business look to be holding up during the early part of Q2.

"Second quarter sales to date from our customers in the meal kit and retail markets have increased significantly. Many of our meal kit and retail customers have indicated their intentions to buy more of our products in the near future," he said.

"We expect sales in this market segment to partially offset the expected decline in sales in our food away from home market. New machinery we acquired about a year ago will help us to fulfil these orders in an efficient and profitable manner."

Anderson said Armanino is exploring new revenue streams with "additional marketing efforts to augment our current efforts in the coming months".

Unveiling its Q1 results, for the period ending 31 March, Armanino reported a decrease in its net sales and net income. Net sales were only slightly down on a year-on-year basis, by 0.1% to US$9.8m, but net income for this period decreased by 23% to $1.1m.

Anderson said: "If not for the Covid-19 impact sales would have been stronger this period."

He quoted industry data which suggests that the US foodservice industry will see a 31% to 48% drop in March sales from February once all the data is collected.