Green Mountain shares plunge despite earnings

by Eric Schroeder
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WATERBURY, VT. — Net income at Green Mountain Coffee Roasters, Inc. rose sharply in the second quarter as the company’s Keurig Single Cup Brewing system continues to drive growth, but that growth is expected to slow going forward. Net income in the second quarter ended March 24 was $93,031,000, equal to 60c per share on the common stock, up 42% from $65,372,000, or 46c per share, in the same period a year ago.

Shares of the Waterbury-based company plunged more than 40% this morning to $29.14 after closing at $49.52 yesterday. Although the company’s quarterly earnings were in line with expectations, its $885 million in sales missed estimates of $972 million.

Green Mountain also reduced its fiscal 2012 sales guidance to $3.8 billion to $4 billion from the earlier forecast of between $4.3 billion and $4.5 billion. The full-year earnings-per-share projection was cut to $2.40 to $2.50 per share from between $2.55 and $2.65.

“Over the past several years we achieved a strong net sales growth rate driven by consumers’ rapid acceptance of our innovative Keurig Single Cup Brewing system,” said Lawrence J. Blanford, president and chief executive officer. “Additionally, during this timeframe we made a number of strategic acquisitions that strengthened our long-term position and contributed to our growth rate. During the second fiscal quarter our 37% net sales growth resulted from more consumers adopting the ease and convenience of Keurig’s Choose. Brew. Enjoy. approach to beverages.”

G.M.C.R. attributed 90% of consolidated net sales during the second quarter to the Keurig brewing system and its recurring portion pack sales. Net sales from single-serve packs totaled $655 million, up 243% from the same period in fiscal 2011.

The company and its licensed partners sold approximately 1.5 million brewers during the second quarter, according to G.M.C.R. This figure was well off from the number of brewers that have been sold in recent quarters.

Net income in the six months ended March 24 was $197,445,000, or $1.27 per share on the common stock, up from $67,784,000, or 48c per share, in the same period a year ago. Net sales in the six months rose 67% to $2,043,268,000 from $1,221,806,000.

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