Flowers Foods yesterday (9 November) reported strong third quarter earnings, with increased sales offsetting higher energy and ingredients costs, causing management to increase its earnings guidance for fiscal 2006.
Sales in the quarter rose 8.1% year-on-year, increasing to US$408m, while bet income was $22.6m, or $0.37 per share, compared to the $11.8m, or $0.19 per share, reported for the third quarter of 2005. This included a $5.5m favourable tax benefit from discontinued operations, which added $0.09 to EPS. Diluted income per share from continuing operations for the quarter was $.28, an increase of 27.3%.
“Flowers Foods performed well in the quarter,” commented George Deese, chairman of the board, CEO, and president. “Our Bakeries Group delivered a 9.9% sales increase, continuing to show the strength of our brands and execution in the marketplace. Our Specialty Group sales increased slightly, even with the planned loss of contract production of certain snack cakes, which will be complete by the end of the year. In the third quarter, both fresh and frozen foodservice sales experienced double-digit growth.
“Good results for the quarter were achieved in the face of higher ingredient and energy costs. Price increases were in place by the last week of the third quarter and should help offset the higher costs we will experience in the fourth quarter and the new year. Therefore, we expect to deliver record results for 2006. Looking ahead, we will continue to execute our strategies and expect solid sales and earnings growth in 2007,” Deese concluded.
Looking to the full year, Flowers increased its earnings guidance and now expects sales growth of between 10% and 10.4%, Income from continuing operations is expected to be in the region of $72m to $74.5m, or 3.8% to 3.9% of sales.