Dreyer’s Grand Ice Cream has announced results for the fiscal year ended 29 December 2001 that reflect strong growth in sales largely offset by the impact of unfavorable dairy raw material costs.
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As a result, Dreyer’s earned US$.24 per diluted common share in 2001, compared with earnings of US$.72 per diluted common share reported in 2000.
Operating Results
Consolidated sales for 2001 increased 17% to US$1.39m, year on year. Sales of the company’s branded products increased 6% to US$888m and represented 64%. The company’s branded portfolio, including Dreyer’s and Edy’s Grand Ice Cream, M&M/Mars, Dreamery, Starbucks, Godiva and Whole Fruit Sorbet, ended the Q4 as the packaged ice cream leader with record market share. Dreyer’s and Edy’s Whole Fruit Bars also made a significant contribution to sales growth in 2001.
Sales of partner brands, products distributed for other manufacturers, increased 44% in 2001 to US$511m, representing 36% of total sales. The increase in sales was driven largely by increased sales of Ben & Jerry’s Homemade superpremium products and by sales resulting from the acquisition of independent distributors in late 2000. The company expanded its distribution of Ben & Jerry’s products in the grocery channel to all of Dreyer’s company-operated markets in March 2001.
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By GlobalDataGross profit increased by US$11m to US$316m for the year, representing a 23% gross margin for the period compared with a 26% gross margin achieved in 2000. The cost of cream, the company’s primary ingredient, rose to comparatively high levels for much of 2001, creating a negative pre-tax cost impact of approximately US$30m versus prior year.
Selling, general and administrative expenses increased by 15% for the year to US$294m, but were unchanged as a percentage of sales at 21%. The dollar increase in SG&A expenses primarily reflects increased trade and consumer promotion spending and, to a lesser extent, increases in administrative expenses. Increases in promotion spending reflect both growth in the company’s core brands and the impact of acquisitions made in 2000.
Pre-tax income for 2001 was US$13m, a decrease of US$27m from 2000 pre-tax income of US$40.6m. Net income for 2001 was US$8m, or US$.24 per diluted common share compared with US$25.3m, or US$.72 per diluted common share, in 2000.
Consolidated sales for the Q4 were US$322.9m, an increase of 13% over sales of US$285m from the previous year. Company brand sales increased 7% to US$211.6m and represented 66% of total sales for the quarter. Partner brand sales increased by 28% to US$111.2m or 34% of sales. Gross profit increased by US$6.2m to US$71.7m in the quarter, representing a 22% gross margin for the period compared with a 23% gross margin achieved in the Q4 of 2000. The impact of the change in dairy raw material costs for the quarter was a negative pre-tax cost of approximately US$3m versus the same period last year.
The company reported a pre-tax loss of US$656,000 for the Q4 of 2001, which represented a US$1m improvement over the pre-tax loss of the same period of 2000. The company’s net income for the Q4 of 2001 was US$172,000, or US$o per diluted common share, compared with a net loss of US$794,000, or US$.04 per diluted common share, year on year.
Chairman’s Comments
T. Gary Rogers, chairman of Dreyer’s Grand Ice Cream, said: “We ended 2001 with an encouraging combination of strengthening sales and sharply lower dairy costs, bolstering our confidence that we have a very strong base for profit growth in 2002 and beyond.
“In the Q4 we achieved the highest share ever for our company’s branded products. The current performance of our business gives us additional confidence as the strong sales trends we experienced since last August continued through the fourth quarter of 2001 and into the first weeks of 2002. Although we saw an extraordinary rise in butter costs in 2001, these costs have now fallen precipitously. We have a strong marketing program for 2002, and will continue to build sales momentum through the combination of the breadth of our brand portfolio and the power of our distribution system.”
