US food manufacturer Pinnacle Foods has blamed rising input costs as its second-quarter net profit halved.
The company said yesterday (10 August) that net profit fell to US$7m against $14m in the same quarter of the previous year.
EBIT fell to $59m from $70m in the second quarter last year. Pinnacle said higher sales volumes, pricing actions and productivity improvements were offset by advertising investment of around $8m as well as higher commodity costs.
However, sales rose 4.5% over the quarter to $602m. The company said that net sales from its North American retail business, excluding the impact of the Birds Eye Steamfresh meals and US Swanson businesses that it exited, increased 7%.
CEO Bob Gamgort said: “We are pleased with our strong sales growth in the second quarter, which reflects enhanced consumer marketing programs, successful new product introductions and the shift in Easter timing. For the quarter, we grew or held market share on brands representing 72% of our product contribution. Input cost inflation caused our gross margin to decline in the quarter. However, we implemented pricing actions to offset the impact going forward.”
For the first half, net income rose 53.7% to $27.8m and EBIT was up 8.2% to $144m. despite sales falling 2% to $1.21bn
Pinnacle said that sales in its North American retail business were “basically flat” excluding the impact of the exited Birds Eye Steamfresh meals and US Swanson meals business. It experienced “strong growth” in sales from products including in Birds Eye Steamfresh vegetables, Armour canned meat and Nalley chili. The company said that product launches contributed to the growth of these ranges.