US speciality food firm Lancaster Colony has issued a note of caution against rising commodity costs despite strong first-quarter results.
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The company, which makes foods including salad dressings and pies, today (29 October) booked a 7% rise in underlying first-quarter profits. Earnings reached US$14.5m for the three months to 30 September. Net sales climbed 9% to $286m.
Nevertheless, chairman and CEO John B. Gerlach, Jr said: “We remain challenged by the markedly higher food commodity costs. Greater sales volume and somewhat higher pricing allowed us to make headway in what was otherwise an uncertain economic environment.”
Lancaster Colony’s food sales rose 7% to $184.6m but Gerlach said that, while the company expected growth to continue during the second quarter of the year, cost pressures will rumble on.
Gerlach said: “We expect continued specialty foods sales growth but remain confronted by broadly and sharply higher ingredient costs.”
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By GlobalDataLancaster Colony has suffered from investor criticism in recent months. To stave the threat of investor activism over the company’s performance, Lancaster Colony has agreed appoint an independent director and to form a “task force” to work on improving its “operations, productivity and profitability”.
