Profit, sales climb at Ralcorp in Q1

by Eric Schroeder
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ST. LOUIS — Net income at Ralcorp Holdings, Inc. in the first quarter ended Dec. 31 totaled $42.4 million, equal to $1.66 per share on the common stock, up sharply from $7.6 million, or 28c per share, in the same period a year ago. The most recent quarter’s results included a non-cash gain of $37.8 million on Ralcorp’s forward sales contracts related to its shares of Vail Resorts, Inc. This compared with a $17.9 million non-cash loss related to those contracts in the first quarter of fiscal 2007.

Net sales for the quarter were $650.7 million, up 24% from $522.7 million last year. Ralcorp said approximately 60% of the $128 million in sales growth was attributable to the timing of recent acquisitions. The remaining growth was attributed to volume gains in all segments and price increases in response to rapidly rising costs.

Ralcorp said its overall ingredient and packaging costs were unfavorable to the tune of about $25.7 million during the quarter.

Net sales for Ralcorp’s Cereals, Crackers and Cookies segment were $277.3 million, up 39% from $199.1 million in the same year-ago quarter. The improvement primarily reflected the addition of the Bloomfield Bakers business, which was acquired on March 16. Excluding Bloomfield, sales in the segment rose 8%, with increases at both the Ralston Foods cereal and snacks division and the Bremner cracker and cookie division. Profit contribution for the segment during the quarter totaled $27.4 million, up from $19.9 million in the first quarter of fiscal 2007. Ralcorp said Bloomfield contributed about $4 million to the segment’s profit contribution during the first quarter.

Net sales in Ralston Foods (including the Bloomfield acquisition) grew 62% to $194.8 million, up from $120.3 million in the same period a year ago. Ralcorp said the doubling of cereal co-manufacturing business added approximately $7 million during the quarter. Meanwhile, hot cereal volume declined 6% in the quarter, which compared with a 7% improvement in the same period a year ago.

Sales in the Bremner cracker and cookie division totaled $82.5 million, up 5% from $78.8 million. The company attributed the gain to higher selling prices, and noted that a 7% sales volume change in cookies was driven by an expanded product offering with a major customer.

Profit contribution in the Frozen Bakery Products segment was $17.7 million, down 10% from the same period a year ago. Ralcorp said the decline reflected overall ingredient costs that were unfavorable by $6.7 million. Manufacturing expenses also were higher, driven by higher plant operating costs from increased staffing and wage changes, higher depreciation, and higher maintenance expense. Total net sales of the Frozen Bakery Products segment were $182.5 million, up 23%. The gain was driven by a 9% volume growth, a full quarter of sales from Cottage Bakery, and selling price improvements.

Net sales of Dressing, Syrups, Jellies & Sauces, also known as Carriage House, rose 9% to $109.8 million, while profit contribution fell to $1.7 million from $4.5 million in the first quarter of fiscal 2007. Ralcorp experienced 47% volume growth in its peanut butter line, helped by a February 2007 recall of a competitor’s product.

Profit contribution in the Snack Nuts & Candy segment, also known as Nutcracker Brands, fell 22% to $6.4 million despite a 9% gain in sales during the quarter. The lower profit contribution was attributed to higher costs of peanuts and cashews.

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