Input prices and promotional costs weighed on quarterly profits at US food maker Lancaster Colony.
The company, which owns Marzetti salad dressings and New York garlic bread, yesterday (26 January) reported a 12.9% in net income to US$30.4m for its fiscal second quarter, which ran until 31 December. Operating income slid 16.1% to $43.7m.
Go deeper with GlobalData
Lancaster, which also sells non-food products, said its larger speciality foods division fall 13% to $44.8m due to increased raw material, distribution and promotional costs, which was not offset by “record” sales.
Revenue from the division was up 5% to $266.2m. However, the company’s total net sales fell 1% to $312m.
Chairman and CEO John Gerlach Jr said: “Our food segment grew its top line in the face of very unsettled consumer spending patterns. As expected, marked increases in input costs and lower candle sales impacted our operating income.”
The fall in quarterly profits contributed to a drop in half-year earnings. Lancaster reported a 10.4% fall in first-half net income to US$51.6m. Operating income was down 12.3% at $76.2m. Half-year sales inched up 0.9% to $586.3m.
US Tariffs are shifting - will you react or anticipate?
Don’t let policy changes catch you off guard. Stay proactive with real-time data and expert analysis.
By GlobalDataGerlach said moves to increase prices and the introduction of new products should improve Lancaster’s results over the rest of the financial year.
“We believe that specialty foods sales and operating results should benefit from pricing actions taken this month on many retail products. Should commodity costs stabilise near current levels, our recent unfavorable cost comparisons will become progressively less pronounced over the remainder of the fiscal year.”
