The chief executive of US snack firm Lance has warned that the company expects to have to increase prices to protect margins as commodity costs mount.
Lance president and CEO David Singer, speaking today (3 November) as the company published its third-quarter results, said the “escalation” in the cost of raw materials would need to be offset by price hikes.
“We expect that price increases will be needed to maintain our margins as we go into next year, especially in our private-brand product portfolio,” Singer said.
The Lance boss said the company, which makes Lance sandwich crackers and Stella D’oro cookies, also expected promotional pressure to ease next year.
“In our branded business, we are cautiously optimistic that the requirement for promotional spending will ease as we move into 2011, helping to offset commodity pressures in these product lines,” Singer said.
For the third quarter to 25 September, Lance posted an 18% rise in net income to US$10.4m. Net revenue inched up 1% to $237.7m.
Singer said Lance was “not satisfied” with the growth but “generally pleased” with the company’s performance, given the “tough economic environment”.
He added: “Modest net revenue gains and good expense control, combined with continuing benefits of the foundational changes implemented over the past several years, continue to lead to solid profitability, which sustains the momentum we gained in the second quarter of 2010.”
For the full earnings statement from Lance, click here.