Ralcorp Holdings has reported a 5% rise in net sales for the three months ended December 31, 2005 to US$464.0m, compared to the same period last year. However, the sales rise was not enough to stave off a fall in earnings.
Net earnings for the first quarter were $9.7m in fiscal 2006 compared to $16.6m for the same period last year. Diluted earnings per share were $0.32 compared to $0.55 a year ago.
The company said the increase in net sales was primarily due to business acquisitions. Net sales for the first quarter of fiscal 2006 included $11.5m from the Medallion Foods business, acquired June 22, 2005, and $9.3m from the Western Waffles business, acquired November 15, 2005.
The decrease in net earnings was primarily due to increases in the costs of raw materials, freight, and energy, slightly offset by earnings added by the recent acquisitions and the limited effect of pricing increases.
“Because of the rapid escalation of these costs and the nature of the private label retail business, these costs could not be fully recovered during the quarter through increased pricing or a meaningful reduction in other costs. Ralcorp’s ongoing efforts to offset the effects of these elevated costs are not expected to be fully realized until the second half of fiscal 2006. Accordingly, second quarter total segment profit contribution for fiscal 2006 could be slightly lower than in the previous year,” the company said.