Dakota Growers Pasta net up sharply in fiscal '09

by Eric Schroeder
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CARRINGTON , N.D. — Net income for Dakota Growers Pasta Co. Inc. climbed 90% to $17,681,000, equal to $1.70 per share on the common stock, in the fiscal year ended July 31. This compared with income of $9,291,000, or 88c per share, in fiscal 2008.

Third-quarter net revenues rose 6% to $297,438,000 from $280,199,000. The increase reflected higher per unit selling prices associated with the pass through of higher durum costs as well as higher pasta sales volumes in the retail and ingredient markets.

Retail market revenues increased by $22,100,000, or 20%, thanks to an increase of 14% in average selling prices and a 5% increase in volume. Food service revenues, meanwhile, decreased by $1,300,000, or 1.8%, due to a 5% decrease in volume partially offset by a 4% increase in average selling prices. Ingredient revenues increased $6,500,000, or nearly 10%, due to a 5% increase in volume and a 4% increase in average selling prices.

Revenue from mill product sales for fiscal 2009 totaled $23,800,000, down $10,100,000, or 30%, from fiscal 2008.

In its annual report filed Oct. 29 with the Securities and Exchange Commission, Dakota Growers said that in addition to the more than 100 different shapes of pasta it makes and sells to all markets, the company also purchases additional dry pasta shapes from other manufacturers for resale. Outside purchases of pasta made up more than 2% of net sales for the year ended July 31, according to Dakota Growers.

The company’s top 10 customers accounted for 44% of net revenues in fiscal 2009, down from 45% in fiscal 2008 and 50% in 2007. The leading customer was U.S. Foodservice, which accounted for 7% of total sales in fiscal 2009, down from 9% in fiscal 2008 and 12% in fiscal 2007.

Dakota Growers, which is the third largest pasta manufacturer in North America, owns and operates a milling facility in Carrington, N.D., and pasta production plants in Carrington and New Hope, Minn. The company currently has annual capacity to grind more than 12 million bus of grain and to produce approximately 500 million lbs of pasta. The company said it is in the process of expanding its Carrington facility, which will increase pasta production by approximately 60 million lbs when completed.

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