St. Louis-based Aurora Foods, a producer and marketer of leading food brands, has posted results for its Q2 ended 30 June in line with company expectations.
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Aurora’s adjusted EBITDA were US$24.8m, compared with last year’s Q2 adjusted EBITDA of US$33.5m.
Unit volume in the Q2 increased a strong 10% versus prior year and was led by Duncan Hines, Aurora’s largest brand. Other businesses with strong growth were frozen breakfast food, syrup, Mrs. Paul’s seafood, foodservice and alternate channels. Lender’s volume was down approximately 6%, a significant slowing in the decline versus previous quarters.
“We are pleased with our Q2 results,” said James T. Smith, chairman and CEO: “One of our key goals in 2002 is to continue to take the necessary strategic steps to strengthen our brands by building market share and consumer take-away. This quarter we significantly increased our new product spending by over US$5m, and our unit-volume results benefited from key new products in seafood, bagels and baking mixes. We also made significant improvements in our base marketing programmes. While these spending increases reduced our EBITDA versus Q2 year ago, we believe they are essential building blocks to creating a high-value, world-class food business.”
Net sales were US$176.5m, compared with US$181.6m a year ago, a decline of 2.8% on the impact of product mix, new product introductory spending and increased marketing programmes. The Q2 net loss was US$31.1m, compared to US$9m a year ago. The Q2 2002 results include a pre-tax charge of US$29.9m to close the company’s West Seneca, NY, bagel facility. All production was transferred to the more efficient bagel facility in Mattoon, Illinois.
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By GlobalDataReducing costs
Aurora said that its cost-effectiveness program continued to help improve operating results and drive unnecessary costs out of the business. Major projects include moving distribution and syrup production to the St. Elmo facility, various purchasing savings as well as the previously announced closing of the West Seneca bagel plant.
“We will continue to take every aggressive step possible to reduce costs,” Smith said. “We continue to be focused on strengthening Aurora’s brands, reducing unnecessary costs and pursuing further steps to deleverage our balance sheet.”
Last month, Aurora announced US$62.6m of new capital from banks and major shareholders. At that time, it also retained Merrill Lynch and JPMorgan to investigate a range of strategic alternatives, including the sale of certain assets or businesses.
