Rising commodity costs and a poor maple syrup crop resulted in a “difficult” third quarter for B&G Foods, the US food group.
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B&G’s success in securing price increases failed to offset the impact of higher wheat, maple syrup and corn costs, while a shortfall in the maple syrup crop in Canada also hit the company.
B&G posted a drop in net income to US$2.9m for the 13 weeks to 29 September, down from $4.8m in the comparable period last year.
Net sales were down by 0.4% to $116.5m from $117m as a result of a decline in unit volume on the back of an industry-wide shortfall of maple syrup.
The company recorded a decline of 19.5% in operating income to $16.2m and a drop in gross profit of 19.7% to $30.7m due to an increase in commodity costs, partially offset by sales price increases.
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By GlobalData“The third quarter was clearly a difficult quarter for our company, but as our fourth-quarter 2008 and full-year 2009 guidance implies, we believe an anomaly in our performance,” said David Wenner, president and CEO of B&G Foods.
“Unique events such as an unprecedented surge in the cost of wheat and the failure of the 2008 maple syrup crop in Canada adversely affected third-quarter results. As we entered the fourth quarter, those issues have for the most part been resolved and our business has been returning to an operating level more consistent with our expectations.”
The company said it maintains a “very positive” outlook for price and cost in 2009 and offered a guidance of $95m-$98m for full year 2009 EBITDA.
This month, B&G announced plans to slash its workforce by 7.5% in a bid to cut costs, blaming “unprecedented cost increases”. The company said it expects the job cuts to save the company around US$3.7m annually.
