US pasta maker American Italian Pasta (AIPC) has said it expects second-quarter sales and earnings to fall short of internal targets due to declining pasta consumption.
The company said the decline in pasta consumption accelerated during the quarter ended 2 April 2004. Retail consumption of dry pasta, as measured by AC Nielsen, declined by 7% in volume for the 13 weeks ended 20 March 2004, double the 3-4% decline experienced in all channels in the first fiscal quarter.
AIPC said it believes that the current pasta market trends are principally the result of low carb diets and broader carb consciousness among US consumers. The company said it has responded by increasing new product development and launching a range of low and reduced carb pasta products.
Because of this, second-quarter results will include a charge for new product development and start-up costs. However, the company said net revenues generated from the low and reduced carb pastas totalled approximately US$8m for the quarter, up from $2.7m in the first quarter.
AIPC expects to report net revenues of around $113m for the second quarter, compared to $110.7m reported in the year-ago quarter. The company now expects second-quarter net income of $7.5m-7.8m, or 40-42 cents per share. For the second quarter of 2003 the company reported net income of $8.9m, or 48 cents per share.
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For the full year, the company expects to report slight revenue growth but slightly lower net income.