Dreyer's net rises sharply in quarter

by FoodBusinessNews.net Staff
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OAKLAND, CALIF. — Net income at Dreyer’s Grand Ice Cream Holdings, Inc. totaled $859,000 for the third quarter ended Sept. 24. That compares with a loss of $10,479,000 for the same period last year. The company received an income tax benefit of $10,623,000 for the quarter, compared with a tax benefit of $6,699,000 in the third quarter last year.

Net sales of company brands for the second quarter increased $64,789,000, or 16%, to $475,201,000 for the quarter, up from $410,412,000 in the year-ago quarter. The increase was driven by net sales increases for the company’s premium and superpremium products reflecting continued strong sales of premium Dreyer’s and Edy’s Slow Churned Light ice cream, classic Dreyer’s and Edy’s Grand ice cream and Haagen-Dazs branded superpremium products.

The increase also reflects an increase in net sales of the company’s frozen snacks primarily based on the addition of Skinny Cow ice cream products to the company-owned portfolio following the acquisition of Silhouette Brands, Inc. in July 2004, as well as the recent addition of Dreyer’s and Edy’s Dibs and Nestle kids frozen snacks.

Net sales of partner brands, products distributed for other manufacturers, decreased $13,185,000, or 24%, to $40,634,000. The decrease primarily is based on the classification of the sales of Skinny Cow as company brands during the period.

The decrease also reflects reduced net sales of certain other brands and the termination of certain distribution agreements.

The decrease partially was offset by the classification of the sales of the Dreamery, Whole Fruit Sorbet and Godiva brands as partner brands following a September 2004 agreement with Integrated Brands, Inc., a subsidiary of CoolBrands International, Inc.

Other revenues decreased $5,013,000, or 53%, to $4,433,000 from $9,446,000 in the same period last year. The decrease in other revenues primarily was attributable to a $5,496,000 decrease in revenues received from integrated brands for manufacturing and distribution of the divested brands.

Total net revenues increased $46,591,000, or 10%, to $520,268,000.

Cost of goods sold increased $29,301,000, or 7%, to $445,664,000, up from $416,363,000. The increase in cost of goods sold was driven by an increase in sales and the related increase in distribution expenses, offset by a decrease in drayage expense paid to CoolBrands for the delivery of certain products and a decrease of approximately $4,900,000 in the cost of cream.

The company’s gross profit increased by $17,290,000, or 30%, to $74,604,000 for the quarter, representing a 14% gross margin compared with a 12% gross margin for the same period in 2004.

Selling, general and administrative expense increased by $5,093,000, or 8%, to $67,351,000 for the second quarter, representing 13% of total net revenues, compared with $62,258,000, or 13% of total net revenues, for the same period in 2004. The increase in expense in the quarter primarily was driven by increases in marketing expenses.

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