US frozen-food firm Overhill Farms has seen its first-quarter profits slide after a shift in product mix, less favourable commodity prices and increased costs weighed on margins.
Alongside the results, Overhill revealed it was in talks over a mystery transaction with an unnamed entity.
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Net income slumped 70.5% to US$331,000 for the quarter to 30 December, while operating income declined 69% to $575,988. Revenues were up 5% to $49.9m as increased foodservice sales managed to offset a decline in retail revenues.
The company said it is negotiating price increases with customers as contracts to improve its margins on its private labels. It has also negotiated improved prices for ingredients and packaging with several suppliers, and continues to seek further cost reductions.
Chairman, president and CEO James Rudis said: “While we are pleased to report increased revenues and profitable operation in a market environment that continues to be extremely challenging, we recognise the necessity to expedite our efforts to move gross margins back toward historic levels.
“After several months of operational review and planning, we have launched a number of initiatives aimed at improving profitability, and are planning additional measures that we believe could be favourable to gross margins.”
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By GlobalDataIn conjunction with its investment banking firm Piper Jaffray, the group said it is reviewing a potential transaction. “We are currently engaged in discussions with an outside party. At this point it is not clear whether any transaction will occur, and the management team continues to operate the company focused on its long-term growth,” Rudis added.
