TreeHouse earnings slide 72% in Q1

by Eric Schroeder
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WESTCHESTER, ILL. — Rising commodity costs contributed to lower earnings at TreeHouse Foods, Inc. in the first quarter ended March 31. Net income in the quarter totaled $2,061,000, equal to 7c per share on the common stock, down 72% from $7,414,000, or 24c per share, in the same period last year. TreeHouse said first-quarter income was adversely affected by the closing of its Portland, Ore., pickle plant and an exchange loss on Canadian denominated intercompany debt. Excluding those items, e.p.s. would have totaled 34c per share, the company said.

Net sales for the quarter totaled $360,623,000, up 39% from $258,984,000 in the first quarter of 2007.

Beginning Jan. 1, TreeHouse realigned the way in which it reports operating results, shifting to channels of distribution and away from product categories.

The company’s North American Retail Grocery segment, which includes branded and private label products sold to customers within the United States and Canada, posted direct operating income of $25,492,000 on sales of $219,640,000, which compared with $18,605,000 and $146,588,000, respectively, in the same period a year ago.

Food Away From Home, made up of sales to food service customers, had direct operating income of $7,568,000, up from $5,947,000 in the first quarter of 2007. Net sales in the segment rose 29% to $70,926,000.

The Industrial and Export segment, comprising the company’s co-pack business and non-dairy powdered creamer sales to industrial customers for use in industrial applications, posted direct operating income of $9,603,000 on sales of $70,057,000, up from $6,488,000 and $57,205,000, respectively, in the same period a year ago.

"Our first-quarter results exceeded our expectations, driven by strong top-line growth before acquisitions and very good performance at E.D. Smith," said Sam K. Reed, chairman and chief executive officer. "In addition, our pricing and internal cost savings programs resulted in margins before acquisitions decreasing only 17 basis points, despite very large increases in our commodity costs. Retail grocers are now seeing consumers switch to value priced store brands, and we believe the TreeHouse product portfolio is well positioned to take advantage of these shifts."

Mr. Reed reaffirmed the company’s full-year 2008 guidance of earnings per share of $1.50 to $1.55.

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