US packaged bakery products maker Flowers Foods has reiterated previous guidance for fiscal 2005 of US$1.65bn to $1.7bn in sales and net income of 3.75% to 4% of sales.

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George Deese, president and chief executive officer, said the company is revising its long-term sales goal to a range of 5% to 8% from the current range of 3% to 5%. Sales through the first half of fiscal 2005 increased 11.3%, and the company’s sales guidance is for an increase of 8% to 10% for the full year.


“In the short term, we expect sales to exceed our long term goal as we take advantage of changes in the competitive landscape occurring in the baking industry,” Deese said.


The company said its sales growth requires it to build new highly efficient production capacity in strategic locations earlier than had previously been planned. Earlier this year, new capacity was brought on line in Denton, Texas; Crossville, Tennessee; and Miami, Florida. In 2006, new capacity is expected to open in Villa Rica and McDonough, Georgia, and in the Piedmont area.


Flowers said its bakery in New Orleans remains closed due to Hurricane Katrina. Although the bakery sustained some damage, it may be operational in the fourth quarter, depending on when repairs and clean-up can be completed. Previously, ten of the company’s 24 warehouses in New Orleans and along the Gulf Coast were out of service. Deese said 20 warehouses are now operating.

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Costs related to the hurricanes are estimated to be approximately $8m for the year, excluding the cost of starting up a closed bakery to compensate for the lost production in New Orleans or the re-starting of the New Orleans bakery. Also still to be determined are the added logistics costs of shipping products from other bakeries to serve markets in Louisiana, Mississippi, and Alabama.  The company has insurance coverage for physical property as well as for business interruption, but cannot estimate the timing of recovering the costs incurred as a result of the storms.