WESTCHESTER, ILL. — Input cost inflation pressured 2007 results for TreeHouse Foods, Inc., leading to a 7% decline in income during the year.
For the year ended Dec. 31, the company posted net income of $41,622,000, equal to $1.33 per share on the common stock, which compared with $44,856,000, or $1.44 per share, during 2006. Net sales for the quarter were $1,157,902,000, up 23% from $939,396,000 during the previous year.
"Our 2007 results indicate that despite a slower-than-expected start to the year and input cost inflation that escalated beyond all food industry expectations, we have shown that strategic pricing decisions and an aggressive program of internal cost savings can overcome daunting external influences," said Sam K. Reed, chairman and chief executive officer. "We are especially pleased to finish the year at the high end of our expectations despite the unprecedented headwinds we faced this year."
For the fourth quarter, TreeHouse had net income of $14,278,000, or 46c per share, down 37% from $22,605,000, or 72c per share, during the same quarter of the previous year. Net sales for the quarter were $370,936,000, up 31% from $282,870,000 during the same quarter of 2006.
Mr. Reed said for 2008, the company expects growth in earnings of 13% to 16% before considering new acquisitions.
"We performed very well in 2007 despite extraordinary input cost increases that were approximately four times the level the food industry expected," Mr. Reed said. "Although we can hope for improvement in commodity prices in 2008, the heard reality is that we fully expect another year of increases. Despite the continued need to pass these costs along to consumers, our teams have shown their ability to manage in a very difficult environment and to drive internal efficiencies."
Bay Valley Foods, a division of TreeHouse, also announced it is closing its Portland, Ore. pickle plant in early June.
"Unfortunately, we have experienced a reduction in our pickle volumes and Portland is our highest cost and lowest utilized facility," said George Jurkovich, senior vice-president of operations. "Thus, we find it necessary to consolidate our manufacturing network and close the Portland plant. Current production at Portland will be absorbed by other Bay Valley Foods facilities."
There is an adjacent distribution center to the plant, but it is not a part of the closing. Mr. Jurkovich also said the company will be working with customers to ensure an uninterrupted supply of pickle products during the transition.