Snack food manufacturer Lance has reported a 70% drop in second-quarter net income as a result of rising ingredient costs.
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The slump in profits forced the US firm to cut its full-year earnings per share forecast.
Lance posted net income from continuing operations of US$2.7m, down from more than $9m in the same period last year.
Net revenue rose to $214m, an 8.4% increase over second quarter 2007, and 6.6% excluding acquisitions.
The company’s branded product sales, which represented 63% of total sales in the quarter, grew 6%, driven by higher selling prices, saw continued strong volume growth in Lance branded home-pack sandwich crackers and Cape Cod branded potato chips.
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By GlobalDataThe company also saw incremental branded sales from the Brent & Sam’s acquisition, which added around 1%.
“We anticipated our ingredient costs to be higher in the second quarter, therefore we implemented price increases,” said David V. Singer, president and CEO. “However, our costs for ingredients and energy escalated beyond our expectations; therefore our price increases were not sufficient to restore our profit margins. We are in the process of taking additional pricing actions during the third quarter which will restore our profit margins once these new prices are implemented.”
Lance said it has lowered its 2008 full-year earnings per diluted share estimate to a range of $0.62 to $0.70.
