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May 19, 2011

US: Flowers Foods profits edge up

US bread group Flowers Foods has booked a slight increase in first-quarter earnings, which were hit by one-time charges and declining sales volumes.

US bread group Flowers Foods has booked a slight increase in first-quarter earnings, which were hit by one-time charges and declining sales volumes.

The maker of Nature’s Own bread said that earnings in the three months to the end of March climbed 1.2% to US$41.2m, or 45 cents a share.

However, earnings per share were hit by charges related to the closure of a bakery and the impeding merger with Tasty Baking Co. Excluding these one-off items, profits would have risen 13.6%, the company emphasised.

Sales during the period edged up 0.9% to $801.8m, reflecting a favourable net pricing/mix of 2.1%, which was offset by a 1.2% decline in sales volumes.

Flowers added that volumes were hit by lower than expected branded sales in both retail and foodservice channels.

Gross margin rose to 48.6% from 47.8% as a decrease in ingredient costs offset increases in packaging and workforce-related costs, Flowers revealed.

Commenting on the group’s outlook for the year, Flowers chairman George Deese said that the company was well-placed to take advantage of its recent acquisition of Tasty Baking.

“As the year unfolds, we expect to grow sales as we reach new customers, new markets, and take advantage of opportunities presented with the Tasty merger. Our focus is on improving operations and increasing prices to offset higher costs, managing our core business to maintain share and volume, completing the Tasty merger and planning for a smooth integration, and exploring growth opportunities,” he said.

Deese said the company continues to expect sales growth of 3-6%, excluding the impact of the Tasty merger, and diluted earnings per share growth of 5-10%.

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