TreeHouse Foods, the largest private-label supplier in the US, has said it is making progress in its rationalisation strategy but warned it is not near the finishing line just yet.
The Illinois-based business launched the TreeHouse 2020 strategy in 2017, which entails reducing a bloated SKU count and improving profit margins by three percentage points.
Go deeper with GlobalData
But it warned this week after reporting 2018 results, which saw sales dip from US$6.30bn in 2017 to $5.81bn, that the market should expect to see more revenue declines, at least in the short term.
Reflecting on the 2018 performance, chief executive officer Steve Oakland said: “I am extremely proud of the progress we made in 2018 with the dedication and effort our organisation put forth.
“I’m particularly pleased with the excellent cash performance in 2018 which enabled us to reduce our net debt by $285m for the year.”
But Oakland admitted that there is still work to be done to improve revenues, partly because of headwinds affecting its snacks business, which it plans to sell off.
How well do you really know your competitors?
Access the most comprehensive Company Profiles on the market, powered by GlobalData. Save hours of research. Gain competitive edge.
Thank you!
Your download email will arrive shortly
Not ready to buy yet? Download a free sample
We are confident about the unique quality of our Company Profiles. However, we want you to make the most beneficial decision for your business, so we offer a free sample that you can download by submitting the below form
By GlobalData“Revenue in the fourth quarter declined as we anticipated, largely driven by the loss of low-margin business in our snacks division,” he said.
“While we will need to lap some revenue decline related to volume loss in the first half of 2019, I’m confident in our ability to pivot to revenue growth in the second half of the year as we better position ourselves to capitalise on the private-label growth in our categories.”
Speaking to analysts after the results came out on Thursday (14 February), Oakland said: “We have a new team in the snacks business and we have an awful lot of effort going on there. And we have a real obligation and, quite frankly, an opportunity to position that business to prosper in whatever its new life is.”
Oakland pointed to what he called “operational progress” in 2018.
“We consolidated three manufacturing plants and 12 warehouse locations, and permanently decommissioned 20 production lines. We optimised our administrative footprint as we closed the Omaha office, and we are in the process of closing St. Louis,” he said.
TreeHouse confirmed it has hired an adviser to explore strategic alternatives for its snack nuts and trail mix businesses, including selling it off.
