- Record First Quarter Revenues Increase by 41%
- Two Acquisitions, Including Sara Lee Bakery UK Completed With Additional Revenues of $93 Million U.S.
Hibernia Foods plc (NASDAQ: HIBNY; the “Company”) Friday (21 September) announced its results for the quarter ended June 30, 2001.
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Revenues for the quarter amounted to IR(pound)31.56 million ($34.04 million) compared to revenues of IR(pound)22.44 million ($24.21 million) for the same quarter in fiscal 2001, an increase of 41%. The increase in revenues was partially attributable to the inclusion of 3 months revenues from the chilled desserts business of La Boheme Limited acquired in April 2001 together with the inclusion of 1 month’s revenues from the Sara Lee Bakery UK business acquired on June 4th 2001.
Revenues from the Entenmann’s division grew by 39% compared with the same quarter in fiscal 2001 and revenues from the ready-meals division grew by 18% compared with the same quarter in fiscal 2001.
The frozen desserts business excluding the acquired Sara Lee Bakery UK business had 13% lower revenues compared to the same quarter in fiscal 2001. The lower revenues figure principally arose in the two months preceding the Sara Lee Bakery UK acquisition.
Gross Profit for the quarter was IR(pound)2.82 million ($3.05 million) compared to IR(pound)3.21 million ($3.46 million) for the similar three-month period in fiscal 2001. The reduction in gross profit was principally attributable to (1) once-off charges associated with a reduction in the Company’s inventory of finished goods, both in terms of the value of finished goods and the number of stock keeping units and (2) the competitive nature of the frozen desserts market, particularly in the two month period prior to the acquisition of Sara Lee Bakery UK. The reduction in inventory levels was part of the restructuring programme initiated in the frozen desserts division and this resulted in approximately IR(pound)1.15 million ($1.24 million) in additional factory overhead being absorbed in the quarter, compared to the similar three-month period in fiscal 2001. The Company expects that the lower level of inventories and a reduction in stock keeping units will result in lower inventory holding costs and lower production costs going forward.
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By GlobalDataThe acquisition by the Company of its principal competitor Sara Lee Bakery UK with $75 million in revenues in the UK frozen desserts market, is anticipated to significantly improve margins in the current fiscal year and onwards through a combination of production synergies, purchasing synergies and through price inflation within that market.
The Company’s net loss for the quarter amounted to IR(pound)4.79 million ($5.17 million) compared to a net loss after extraordinary item of IR(pound)6.25 million ($6.75 million) for the same quarter in fiscal 2001, and the loss per share amounted to IR(pound)0.24 ($0.26) compared to IR(pound)0.44 ($0.47) for the same period in fiscal 2001.
Commenting on the results, Oliver Murphy, Chairman and Chief Executive Officer, said “Quarter 1 of fiscal 2002 was particularly active for Hibernia Foods plc. We successfully completed the acquisition of La Boheme Limited, a purveyor of chilled desserts and Sara Lee Bakery UK. These purchases, in conjunction with the actions we started during the course of fiscal 2001 in terms of repositioning our customer base, reducing fixed overheads and simplifying our business through a strategy of SKU rationalisation, have taken the Company to a new level.
We have owned the Sara Lee Bakery UK business for almost four months now and the La Boheme business for almost six months, and I am pleased to report that the performance of those businesses has exceeded our expectations and the initial targets we set for them.
In relation to the La Boheme business, we have successfully integrated that business into Hibernia and we are very excited about the opportunities, which are presenting themselves in the rapidly growing chilled desserts sector. In particular our objectives are (1) to expand the premium range of private-label products we currently supply to Tesco, the largest retailer in the UK, and (2) to fully leverage the excellent La Boheme production facilities and new product development resources to expand the highly successful range of Entenmann’s chilled desserts.
The Sara Lee Bakery UK business has successfully implemented the restructuring programme, which commenced prior to our acquisition of the business. These initiatives included a significant reduction in the fixed overhead base and direct labour numbers, closure and disposal of certain production facilities and elimination of low profit products. We have established a number of working groups, which are exploring and quantifying targeted synergies with particular emphasis on operations, buying and distribution. We intend to complete implementation of these cost reduction strategies within the current fiscal year, which we anticipate will result in higher margins.
As I have stated previously, the repositioning of our customer base particularly within the frozen desserts business, has been successfully implemented. When we acquired the Majestic business and entered the frozen desserts market, we had 12.8% of our frozen desserts revenues with leading UK and European retailers, Tesco and Asda Walmart. Currently those retailers represent in excess of 30% of our non-Sara Lee frozen desserts revenues, and the Sara Lee acquisition will lead to an even more balanced customer profile. I firmly believe that such a customer repositioning, whilst expensive in the short-term, was of paramount importance to our long-term goals and a pre-requisite for our forthcoming planned expansion into continental Europe.
With the re-positioning process complete, the Company is now in the implementation stage of a more balanced strategy of not only driving revenues, but profits as well. Whilst the repositioning strategy with the retailers has been very successful, certainly one of the greatest benefits to Hibernia is that by our dramatically increasing competitive pressures within the market place, it not only created acquisition opportunities such as the Sara Lee Bakery UK business, but perhaps more fundamentally, allowed us to execute those acquisitions at prices considerably lower than otherwise would have been the case. In three years we have grown to a dominant position in certain sectors, with very successful brand growth, and a balanced product portfolio with the major retailers.
Accordingly Quarter 1 should not be viewed on a stand-alone basis, as it reflects the period of transition before and after the Sara Lee acquisition and the highly competitive market place, particularly with reference to frozen desserts, over the past 6 months. I am now confident that we have the appropriate resources and market position to bring our profitability goals to fruition.”
“In conjunction with the ongoing progress within our other divisions, I continue to believe that the Company will return to positive earnings in Quarter 3.”
Hibernia Foods plc is a leading European manufacturer of branded cakes, branded and private-label ready-meals and branded and private-label frozen desserts, headquartered in Dublin, Ireland, with significant manufacturing facilities in the United Kingdom. It is the exclusive European license holder for Entenmann’s branded sweet-baked cakes throughout all of geographical Europe, representing 52 countries and a population of over 700 million people and is the exclusive UK and Ireland license holder for Sara Lee branded frozen desserts.
HIBERNIA FOODS PLC AND SUBSIDIARIES
Summary Consolidated Statements
of Operations for the
Quarter Ended June 30,
2001(1) 2001 2000
US$000s IR(pound)000s IR(pound)000s
Product Revenue 34,043 31,559 22,443
Gross Profit 3,046 2,824 3,208
Operating Expenses (7,002) (6,491) (4,475)
Operating Profit / (Loss) (3,956) (3,667) (1,267)
Interest, Foreign
Exchange and
Other charges (1,212) (1,124) (1,247)
Net Profit / (Loss)
Before
Extraordinary
Item (5,168) (4,791) (2,514)
Extraordinary Item __ __ (3,739)
Net Profit / (Loss)
After Extraordinary
Item (5,168) (4,791) (6,253)
Profit/(Loss) per Share Data for the
Quarter Ended June 30th,
2000(1) 2000 1999
US$ IR(pound) IR(pound)
Basic Profit/
(Loss) per Share
(Before Extraordinary Item) (0.26) (0.24) (0.18)
Basic Profit/
(Loss) per Share
(After Extraordinary Item) (0.26) (0.24) (0.44)
Weighted Average
Ordinary Shares
Outstanding 20,189,802 20,189,802 14,101,901
HIBERNIA FOODS PLC AND SUBSIDIARIES
Summary Consolidated
Balance Sheets as of June 30,
2001(1) 2001 2000
US$000s IR(pound)000s IR(pound)000s
Total Current Assets 57,825 53,606 32,575
Total Fixed Assets 53,675 49,759 37,885
Total Intangible &
Other Assets 5,528 5,125 4,950
Total Assets 117,028 108,490 75,410
Total Current
Liabilities 73,463 68,103 50,776
Other Liabilities 31,257 28,977 8,491
Total Liabilities 104,720 97,080 59,267
Net Assets 12,308 11,410 16,143
This report contains forward-looking statements regarding the company’s future performance. These forward-looking statements are based on management’s views and assumptions, and involve risks, uncertainties and other important factors, certain of which are beyond the Company’s control, that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. These include, but are not limited to, sales, earnings and volume growth, competitive conditions, production costs, currency valuations, achieving cost savings and working capital and debt reduction programs, success of acquisitions, innovations, and supply chain and overhead initiatives and other factors described in “Risk Factors” in the Company’s Form 20-F for the fiscal year ended March 31, 2001, as updated from time to time by the Company in its subsequent filings with the Securities and Exchange Commission. The Company specifically disclaims any obligation to update or revise any forward-looking information, whether as a result of new information, future developments or otherwise.
