Earthbound Farm drags on WhiteWave's full-year performance

by Monica Watrous
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Earthbound Farms, WhiteWave
WhiteWave faces elevated supply chain costs and lower-than-expected sales volumes leading to an excess supply of organic produce.

DENVER — Continued operational difficulties in The WhiteWave Foods Co.’s fresh foods business pressured full-year results for the Denver-based maker of plant-based foods and beverages, organic dairy products and packaged organic salads, fruits and vegetables. Net income for the year ended Dec. 31, 2016, was $215 million, equal to diluted earnings per share of $1.18 on the common stock, up 27% from $168 million, or 94c per share, in the prior year. Total net sales were $4,198 million, up 9% from $3,866 million.

Net income for the fourth quarter was $62 million, equal to 34c per share, up 30% from $48 million, or 26c, in the year-ago period. Total net sales rose 3% to $1,055 million from $1,028 million.

Results reflected elevated supply chain costs and lower-than-expected sales volumes in the company’s Fresh Foods platform, which consists of the Earthbound Farm brand, that led to excess supply of organic leafy greens and produce. Excluding Fresh Foods sales, constant currency segment net sales increased 3% in the fourth quarter and 11% in the full year, with acquisitions contributing approximately 6 percentage points.

Gregg Engles, WhiteWave
Gregg Engles, chairman and c.e.o. of WhiteWave

“We are pleased with the overall financial results our broad portfolio delivered in 2016, with continued strong growth in our coffee creamers and beverages and diversified plant-based product portfolios in the Americas and Europe,” said Gregg Engles, chairman and chief executive officer. “Our Fresh Foods platform, however, continues to struggle with the aftereffects of our fourth-quarter 2015 SAP implementation, and improving Fresh Foods performance is a key focus area.”

Due to its pending merger with Danone S.A., announced on July 6, 2016, WhiteWave did not provide operating or financial guidance for 2017. The closing of the merger remains subject to the satisfaction of customary conditions and is targeted for the first quarter of 2017. Under terms of the agreement, Danone will acquire WhiteWave for $56.25 per share in an all-cash transaction valued at approximately $12.5 billion, including debt and other liabilities.

“Our teams are focused on delivering even stronger results in 2017, while we continue to work toward closing our pending merger with Danone,” Mr. Engles said. “We remain confident in the underlying strength of our market-leading brands positioned in on-trend and growing categories, and continue to believe our pending merger with Danone will create the perfect strategic alliance to maximize the long-term global growth of our brands and optimize the profit potential of WhiteWave’s businesses.” 
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