Boulder expects lower growth from gluten free in 2015

Boulder expects lower growth from gluten free in 2015

Shares in Boulder Brands tumbled yesterday (26 February) after the US food group cut its forecast for 2015 sales, pointing to expected lower growth from its gluten-free brands.

The Udi's and Glutino owner expect net sales to hit US$550-560m this year, an increase of 6-8% on 2014, but lower than its previous forecast for sales to hit $575-585m.

CFO Christine Sacco said the new forecast "reflected an expected impact on currency and a modestly lower growth for our gluten-free brands".

The company raised its forecast for gross margins to approximately 38% to reflect "certain improvements in key commodities". Boulder said the improved margin forecast meant it held its previous estimates for EBITDA at $67-71m and diluted earnings per share at $0.25-0.29.

Boulder saw its net sales jump 12% in 2014 to $516.6m. However, high commodity costs and a "mix shift" to the faster-growing natural division - which houses Boulder's gluten-free brands - meant its gross profit fell. 

In October, Boulder booked $150.5m in impairment charges on its under-performing Smart Balance brand, which the company said today led to an annual operating loss of $116m, compared to operating income of $44.9m in 2013.

Boulder reported a net loss of $127.3m for 2014, against net income of $10.3m a year earlier.

Chairman and CEO Stephen Hughes said: "2014 was a challenging year for three primary reasons - the weaker than expected operating environment for buttery spreads, service issues in our natural segment, and higher egg white costs, a key ingredient in our gluten free baking business. As a result, the company missed the expectations we set in the beginning of the year."

However, Hughes said Boulder had worked on an "inventory re-balancing with our largest distributor".

He insisted consumption had improved in December and "continued to strengthen" in January after "softer" trends in October and November. 

He added: "We continue to improve our operational processes.  These improvements, combined with our key strategies, should result in stronger results in 2015."

Boulder's stock was down 11.11% at $10.20 at 15:10 ET.