Higher costs have resulted in TreeHouse lowering its full-year earnings guidance

Higher costs have resulted in TreeHouse lowering its full-year earnings guidance

TreeHouse Foods has lowered its full-year earnings guidance due to a lag in the company's pricing actions on the back of rising input costs.

The US company, which produces private-label products across a number of categories, said yesterday (22 June) that higher freight, transportation, packaging and other related commodity costs had continued and resulted in the price lag. As a result, TreeHouse has lowered its full-year 2011 adjusted earnings per share guidance to a range of US$2.90 to US$3.00.

In February, the manufacturer forecast earnings per share in the range of $3.10 to $3.18.

Despite this, the firm said it estimates "strong organic sales growth" in the second quarter of 3.5% to 4% and total net sales of around $490m. Second quarter earnings are expected to be between $0.42 and $0.44 per share.

"While we are encouraged by our ongoing top line strength, I am disappointed that we are delivering results below our expectations," said TreeHouse Food's CEO, Sam Reed.

"The challenges we faced in the first quarter from rising fuel and other inputs have persisted, and as a private label company, a lag in pricing has a direct effect on earnings. While our pricing efforts have been aggressive, the impact will not be realised in time to offset the higher cost environment of our second quarter."