Kansas City, Missouri-based dry pasta producer American Italian Pasta Company (AIPC) has posted record EPS of US$0.59 for its Q3 2002, ended 28 June 2002, up 28% over last year.
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Q3 revenues rose 19% to US$91.8m year on year, on 17% volume growth. Volumes were up in all business units, with retail unit volumes up 20%, and institutional and international unit volumes up 12%. Gross margin expanded to 35.4%, up from 32.7% a year ago, due to lower unit costs and the higher margins associated with the branded acquisitions of July 2001. Selling and marketing expenses increased by 46%, due in large part to the higher marketing support associated with the branded products. Operating profit increased 24% to US$18.8m from US$15.1m for the comparable quarter a year ago. Net income increased 30% to US$11m versus US$8.5m a year ago.
“These results reflect an excellent quarter for AIPC,” said Timothy S. Webster, president and CEO: “We had outstanding sales results driven by unit volume increases in all major business units. Volume growth was led by club stores, our private label business, and volume growth generated by the Borden brand acquisitions a year ago this month. Core volume growth (ie excluding the brands acquired from Borden) was almost 10%. These gains reflected some shifting of market share from our brands to our private label business. Consistent with our retail strategy, we continued to grow our overall share of customer and consumer requirements.
“We continued the excellent momentum behind our ‘Funding the Growth’ cost reduction and efficiency programs,” Webster continued. “Our manufacturing costs are down, led by improved labor productivity, our purchasing initiatives are yielding benefits, and our logistics costs are down significantly. Our ‘Funding the Growth’ initiative has now yielded annualized savings in excess of US$6m. I am especially pleased with our progress in continuing cost reduction and enhancing our status as the industry’s low cost producer.”
During the quarter the company signed a long-term supply agreement with General Mills, the largest purchaser of ingredient pasta in the US, to be their primary supplier of pasta.
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By GlobalData“This is one of the largest pieces of new business in the history of AIPC,” commented Horst W. Schroeder, chairman. “General Mills’ decision to expand our relationship validates the vision we pursued in 1998 to build a manufacturing plant in Kenosha, Wisconsin dedicated to the industrial segment. The Kenosha plant is perfectly suited to deliver the high quality/low cost pasta required by this customer. General Mills had been doing business with all of the major players in our industry. Their decision to consolidate with us confirms our status as the low cost producer and allows us to continue building on our 12-year relationship with this industry leader. It also provides a great start to our growth plan for 2003 and beyond.”
Schroeder added that AIPC has extended its employment agreement with Webster through 2005. “I’m very pleased that Tim and I will continue our 12-year partnership and commitment to building AIPC into a quality company with management tenacity, enthusiasm and a great sense of urgency,” he said.
