Bob Evans Farms packaged food arm saw sales rise but profits fall in Q1

Bob Evans Farms' packaged food arm saw sales rise but profits fall in Q1

Bob Evans Farms, the US food manufacturer and restaurant operator, has said its packaged food arm grew its share of its two key categories in the company's first quarter.

Saed Mohseni, the president and CEO of Bob Evans Farms, said the company's BEF Foods division enjoyed rising volumes in the quarter to 29 July, with "market share gains in both its key side-dish and sausage product categories".

BEF Foods' net sales rose 3.5% in the quarter to US$85.9m. Pounds sold increased 6.4% while average net selling price per pound declined 2.7% amid an increased sales mix of lower-priced, although higher-margin, side-dish products relative to sausage. The company also said higher trade spending meant a fall in net prices for sausages.

The BEF Foods division reported operating income of $15.4m, down from the $15.9m generated in the first quarter of the company's previous financial year. Bob Evans Farms cited a $2.1m rise in sow costs, said it upped its trade spending by $2.2m and hiked its investment in advertising by $1.2m Last year's sale and leaseback of two industrial properties also reduced operating income by around $400,000.

Mohseni added: "We have completed the expansion of our Lima, Ohio, refrigerated side-dish plant and are now gearing up to meet peak holiday production which begins during the back half of the second quarter. The Lima plant expansion provides the added production capacity that is critical to our ongoing efforts to gain additional points of distribution, particularly in West Coast growth markets."

Last week, activist investment fund Sandell Asset Management again urged Bob Evans Farms to spin off BEF Foods - and claimed the division could be worth more than the entire company.

Sandell Asset Management, which has repeatedly called for BEF Foods to be split from the rest of the business, said the value of the unit would be $1.24bn, based on the average EBITDA multiple of public packaged food companies in the US. It said the current enterprise value of Bob Evans Farms as a whole was $1.07bn.