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April 27, 2012

US: Costs hit Lancaster Colony profits

Commodity and freight costs have eaten into quarterly profits at US food manufacturer Lancaster Colony.

By Dean Best

Commodity and freight costs have eaten into quarterly profits at US food manufacturer Lancaster Colony.

The company, which makes Marzetti salad dressings and Sister Schubert’s rolls, yesterday (26 April) reported net income of US$18.2m for the three months to 31 March, the third quarter of its financial year. A year earlier, its net income was $19.4m.

The lower profits came despite a 7.3% increase in net sales to $271.1m. Lancaster Colony, which also makes glassware and candles, said sales from its speciality foods arm rose 9.2% to $237.4m. However, operating profit from the unit slid 6.6% amid the higher costs and the timing of marketing spending, chairman and CEO John Gerlach Jr said.

Nonetheless, the increase in sales from Lancaster Colony’s speciality foods unit was higher than in the company’s second quarter and Gerlach said: “We were pleased with the improvement in specialty foods sales, given the widely reported challenges faced by consumers.”

Looking ahead, he added: We anticipate that retail food sales during our fiscal fourth quarter will be affected by the earlier Easter timing and continued economic pressures on consumers. Our specialty foods segment should benefit from ongoing success with recent retail product introductions, somewhat higher average pricing, lower marketing costs and less unfavorable commodity cost comparisons.”

Click here for the release from Lancaster Colony.

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