Californian desserts company Dreyer’s Grand Ice Cream has announced significantly improved results for the Q1 ended 30 March 2002 that reflect strong growth in sales.


The company reported net income available to common shareholders for the Q1 of US$1.31m, or US$.04/diluted common share, a US$.21 per share improvement year on year.


Operating results


Consolidated net sales for the 13-week period were US$290.41m, an increase of 21% year on year. Net sales of the company’s branded products increased 14% to US$166.6m and represented 57% of total net sales. The strong growth of company brands was driven by higher sales of virtually every brand of packaged ice cream in both the company’s premium and superpremium portfolios and a significant contribution from Dreyer’s and Edy’s Whole Fruit Bars.


Net sales of partner brands, products distributed for other manufacturers, increased 33% in the Q1. The increase was driven largely by increased sales of Ben & Jerry’s superpremium products, as well as distributed novelty products and Healthy Choice ice cream. The company expanded its distribution of Ben & Jerry’s products to all of Dreyer’s company-operated markets in March of 2001. Partner brand sales accounted for 43% of total net sales, up from 39% in the same quarter of 2001.

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The company’s gross profit increased by US$5.63m to US$28.25m, representing a 10% gross margin for the Q1 compared with a nine percent gross margin in the same quarter of 2001. The improvement in gross profit was driven primarily by strong company brand sales growth, increased sales of Ben & Jerry’s products, and lower dairy costs. These improvements were partially offset by an increase in slotting expenses equal to about US$.05 per share and by other expenses related to the introduction of new products and a new package size for the company’s premium brands. Dairy raw material costs accounted for a US$1.6m pre-tax benefit in the quarter versus last year, net of the results of butter trading activities.


Selling, general and administrative expenses decreased by US$1.45m to US$25.5m for the quarter and represented nine percent of net sales, compared with US$27m or 11% of net sales in the same quarter of 2001. The decrease in SG&A expenses primarily reflects lower marketing expenses and reduced amortization due to the impact of a change in the accounting for amortization of goodwill. These decreases were partially offset by increased administrative expenses and a charge of about US$.01 per share to reserve receivables from Kmart.


The company now reports sales net of certain marketing and promotion expenses that were previously included in selling, general and administrative expenses. Prior period expenses have been retroactively restated for comparative purposes with no effect on net loss as previously reported.


Chairman’s comments


Chairman T. Gary Rogers commented: “We are very pleased with the continued strengthening of our business. Since August of last year, we have realised outstanding growth in our company brand portfolio. This growth drove a significant increase in Q1 profit, even while we were funding substantial new product and new package introduction expenses. Dairy costs continue to improve versus last year, and while the improvement was slight for the Q1, we are optimistic that this trend will continue.”

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