US packaged bakery foods company Flowers Foods has said third-quarter earnings were negatively impacted by costs associated with the recent hurricanes.

The company reported net income of US$11.8m, or 19 cents per share, for the third quarter to 8 October, compared to $14.6m, or 22 cents per share, for the third quarter last year. The results for the quarter included a charge of $1.6m, or 3 cents per share, related to the final settlement of issues associated with the Mrs. Smith’s frozen dessert business, which was sold in 2003. Sales were $408.0m, up 9.9% from $371.4m a year earlier.

The company estimates the net effect related to Hurricane Katrina was $4.2m, or 4 cents per share, during the quarter, which includes an insurance reimbursement of $1.5m.

“In spite of challenges in New Orleans and our Gulf coast market, we achieved a solid increase in sales and continued to increase our market share during the quarter. As we expected, our earnings were impacted by increased production and distribution costs after the hurricane. We are working to recover those costs covered by our insurance, to add production capacity where we have added new sales, and to improve our sales mix by focusing on our Nature’s Own and Mrs. Freshley’s brands,” said George Deese, president and chief executive officer of Flowers Foods.

“As expected, the cost of serving markets impacted by the hurricane was, and continues to be, high as we transport product from the temporarily re-opened bakery in Houston as well as from our other bakeries to replace production capacity from our New Orleans bakery. Our plans are to re-open the bakery once utility services are restored,” he continued.

“We are encouraged by our strong sales increase in such a challenging quarter. We look forward to better margins as new production capacity comes on line, distribution costs decline, and we realise the benefit of price increases being implemented in the fourth quarter and early in 2006,” Deese added.

The company said that due to costs associated with the hurricanes it is revising its net income guidance to a range of $59.5m to $61.5m, or 94 to 97 cents per share, for fiscal 2005, compared to previous guidance of $62.8m to $68.0m, or 99 cents to $1.07 per share.