Pasta maker American Italian Pasta Company today (Wednesday) reported net income for the second quarter ended 1 April 2005 of $2.4m, compared with $7.6m in the second quarter a year ago.
Total revenues were $100.1m down from $113.3m in the second quarter of fiscal 2004.
Net income for the six months ended 1 April 2005 is $4.5m compared with net income of $15.7m for the six months ended April 2, 2004.
“We have made continued improvements in our operations and our profit model. However, we still have challenges to overcome in some areas of our business,” said president and CEO Tim Webster. “As we expected, our operating results are improving each quarter as we implement our price increases and cost reduction programs, combined with stabilizing pasta industry consumption trends and reduced excess industry capacity.”
“Fundamental improvements were accomplished in customer service levels, production efficiency and manufacturing costs following our restructuring program late in the 2004 fiscal year,” he said. “By the end of the quarter, service levels had again reached the Company’s overall historical standards. The improvements in production efficiency during the first half of the year should allow us to reach our desired levels of production efficiency over the remainder of the year, and incremental operating costs incurred subsequent to the restructuring should be back in line in the third quarter.”
“We are also pleased with the progress we have made in implementing price increases in our private label and ingredient businesses,” he said. “We expected some volume losses as a result of this strategy. We are pleased that we retained more business than expected due to lower excess capacity in the industry.”
“Our branded sales declined by about 22% in the quarter compared to last year,” he aid. “While we are disappointed with this performance, our plan did anticipate about half of the branded declines. The planned reductions were based on expected consumption declines, elimination of unprofitable prior year promotional events and the introduction last year of new reduced carb products.”