Flowers Foods income climbs 24% in Q1

by Eric Schroeder
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THOMASVILLE, GA. — Net income of Flowers Foods, Inc. in the first quarter ended April 21 was $28,493,000, equal to 46c per share on the common stock, up 24% from $22,914,000, or 37c per share, in the first quarter of 2006.

Net sales were $609,947,000, up 8%. The sales gain reflected favorable pricing of 6.4%, positive mix shifts of 1.4% and a 0.4% increase in unit volume.

"Our team again executed well on our operating strategies and achieved record results in the quarter," said George E. Deese, chairman, chief executive officer and president. "During the quarter, we started production on our new bread line in Newton, N.C., continued our strong sales growth in new geographic markets, and offset our higher costs through pricing actions we took in 2006."

Earnings before income and taxes at Flowers Bakeries Group in the first quarter ended April 21 were $45,117,000, up 16% from $38,885,000 in the first quarter last year. Sales were $489,012,000, up 9%. Flowers said Derst Baking Co., which the company acquired in February 2006, contributed incremental sales of $7.2 million during the first quarter.

Flowers Specialty Group EBIT in the first quarter was $8,131,000, up 63% from $4,978,000. Sales were $120,935,000, up 6% from $113,998,000. Specialty Group sales were driven by favorable pricing and positive mix shifts, partially offset by a decrease in store brand snack cake sales.

Gross margin as a percentage of sales for the first quarter fell to 49.7% from 50.4% in the first quarter of fiscal 2006. Increases in production costs, primarily double-digit increases in flour, gluten and sweeteners, were partially offset by pricing gains, Flowers said.

Flowers confirmed its earlier guidance for the full year at $1,983,000,000 to $2,040,000,000. Its projection for income from continuing operations was $81 million to $87 million, as compared with $74.9 million in fiscal 2006.

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