The Chicago-based gum giant Wm. Wrigley Jr. Company has seen continued strength in sales and earnings, with solid gains recorded for the Q2 and H1 2002.
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Earnings per share (EPS) were up 11% for the Q2 and 9% for the H1 over the year ago periods on overall sales gains of 15% for the quarter and 11% year to date. The sales gains were driven by strong worldwide shipment growth of 8% for the Q2 and 7% for the H1.
The net effect of currency translation is neutral year-to-date, but provided some benefit to Q2 results due to the weakening of the US dollar, especially versus the euro and the pound. Even without the positive effect of currency translation, Q2 sales grew by 13%.
Sales
Global Q2 rose to US$708m, up nearly 15% year on year. Sales in the Americas region climbed by 17% on increased volume and continued mix improvement. Double-digit sales increases were recorded across the region, with the exception of Latin America, which experienced a decline compared to its vigorous, double-digit volume and sales growth of a year ago. In the US, Q2 sales climbed by 18%, reflecting strong volume growth, especially for its newer brands, such as Orbit, introduced just a year ago. Sales in the Europe and Asia/Pacific regions combined increased by 13% in the Q2, including a small boost from favourable currency translations of about 2%.
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By GlobalDataFor the H1 2002, consolidated net sales were US$1.3bn, up more than 11% from 2001. The global sales performance is well balanced through the H1 with an 11% sales gain in the Americas and a 12% gain in overseas markets. Year to date, the net impact of currency translations is neutral. Consolidated gross margins essentially held steady versus the year-ago periods at 59.5% for the Q2 and 59.0% for the H1 2002.
Earnings
Consolidated Q2 net earnings of US$110m were up 10%. EPS rose by 11% to US$0.49. Without the currency translation effect, EPS would have been US$0.48.
Q2 operating profits, excluding currency, increased 12% on the prior year. In the Americas, operating profits showed solid growth across the US and Canada, with a strong contribution from Amurol Confections. In Europe, the improvement was led by the UK and Russia. Despite healthy sales and volume increases, led by China, Asia/Pacific operating profits were off slightly as a result of stepped-up investments in sales and brand support. In fact, the results for all the regions reflect sharply increased marketing spending, including brand support redirected from Wrigley Healthcare, which reduced that division’s operating loss in the Q2.
H1 2002 net earnings were up nearly US$14m, 8%, to US$195m. EPS rose by US$0.07, 9%, to US$0.87.
Statement of consolidated earnings
Three Months Ended Six Months Ended
30 June, 30 June,
2002 2001 2002 2001Net sales $708,467,000 617,640,000 $1,307,493,000 1,173,852,000
Cost of sales 286,854,000 251,096,000 536,253,000 479,491,000
Gross profit 421,613,000 366,544,000 771,240,000 694,361,000
Selling, general
administrative 257,981,000 223,936,000 484,177,000 436,256,000
Operating income 163,632,000 142,608,000 287,063,000 258,105,000
Investment income 2,040,000 3,628,000 3,837,000 7,717,000
Other income/
(expense) (5,136,000) (575,000) (5,792,000) (766,000)
Earnings before
income taxes 160,536,000 145,661,000 285,108,000 265,056,000
Income taxes 50,569,000 45,628,000 89,809,000 83,493,000
Net earnings $109,967,000 100,033,000 $195,299,000 181,563,000
Net earnings per average
share of common stock
(basic and diluted)(a) $0.49 0.44 $0.87 0.80
Average number of shares
outstanding for the
period 225,179,916 225,604,521 225,075,100 225,577,183
(a) Per share calculations based on the average number of shares outstanding for the period.
