Higher flour, oil costs hurt Lance net

by Stephanie Bloyd
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CHARLOTTE, N.C. — Rapidly rising flour and vegetable oils costs weighed on earnings at snack food maker Lance, Inc. in the just-ended first quarter. Net income in the first quarter ended March 29 plunged to $645,000, equal to 2c per share on the common stock, down sharply from $6,210,000, or 19c per share, in the same quarter of 2007. Lance attributed the decline to an approximate $13 million pre-tax increase in the cost of ingredients during the quarter.

Net sales in the first quarter totaled $197,968,000, up 9% from $182,426,000 in the first quarter of fiscal 2007. Lance said branded products, which accounted for 62% of total company sales, grew 5%, driven by double-digit growth in home-pack sandwich crackers and Cape Cod branded potato chips. The company’s non-branded products grew 14% year-over-year, driven by continued volume growth, new product introductions and higher selling prices.

"We have executed additional pricing actions that will take effect during the second quarter," said Dave Singer, president and chief executive officer. "Our ingredient costs will be somewhat higher in the 2008 second quarter than in the first quarter, and based on our outlook for ingredient costs and our assessment of the competitive situation, we will continue to consider further pricing actions as the year progresses. Our first-quarter sales volume was strong despite the initial round of price increases, which is encouraging. We remain cautious in our near-term outlook until we see additional data and evaluate the impact on volume following our planned second-quarter price increases."

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