Wrigley quarterly profit climbs 11%

by Eric Schroeder
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CHICAGO — Growth in Europe and Asia coupled with the successful launch of a new sugar-free stick gum called 5 in the United States, helped drive an earnings gain at the Wm. Wrigley Jr. Co. Net income for the third quarter ended Sept. 30 was $164,472,000, equal to 60c per share on the common stock, up 11% from $148,029,000, or 53c per share, during the same period of last year.

Net sales were up 13% at $1,333,052,000, which compared with $1,178,667,000 during the same quarter of last year. Wrigley said about a quarter of the sales gain was driven by net shipment growth, with particularly strong growth across Europe, Middle East, Africa and India (EMEAI) and Asia. The gain also reflected incremental contribution from the A. Korkunov chocolate acquisition in Russia.

"Our overall business, led by Europe and Asia, continues to produce excellent results as a result of our focused investments in product innovation and brand support," said Bill Perez, president and chief executive officer. "As promised, despite the tougher comparisons in the second half of the year, we are making the necessary investments in product and marketing initiatives, as well as taking the steps required to improve our operational efficiency to establish a strong foundation for the long-term growth of the business."

Despite the overall positive results for the company, Wrigley said performance in its North American operations lagged year-ago figures. The region’s operating income totaled $98,582,000 in the third quarter, down 3% from $101,472,000 in the same period a year ago. Net sales for the North American market were $435,859,000, which was down 2%. Wrigley said the drop in sales reflected a 14% decline in volume, adding that the negative volume impact was primarily due to a reduction in trade inventory levels.

"We remain excited about the overall category sales growth in the U.S. and see plenty of opportunities ahead," Mr. Perez said. "5 is off to a great start — with the Rain and Cobalt flavors in the Top 10 gum items overall in terms of velocity, and Flare as the top velocity cinnamon-flavored gum just three months after launch.

"We know we still have work to do in the U.S., including having to manage through some trade inventory adjustments in the back half of the year."

For the EMEAI region, sales increased 24% to $674,897,000 on volume growth of 13%. Operating income in the EMEAI region was $195,820,000, up 16%.

Sales in Asia were up 18% to $153,976,000 with a volume growth of 11%. Operating income was $32,979,000, up 32%.

For the nine months ended Sept. 30, net earnings were $476,986,000, equal to $1.73 per share, up from $400,552,000, or $1.44 per share in the first nine months of fiscal 2006. Sales were $3,964,878,000, up 15% from $3,459,608,000.

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