Lancaster Colony Corp. brands
Lancaster Colony's net income in the quarter was up 13% from the same period a year ago.

COLUMBUS, OHIO — Sales of frozen bread and pasta products represented a bright spot for Lancaster Colony Corp. in the second quarter ended Dec. 31, 2016.

Net income in the quarter was $38,956,000, equal to $1.42 per share on the common stock, up 13% from $34,511,000, or $1.26 per share, in the same period a year ago. Net sales were $326,773,000, up 0.6% from $324,769,000 in October-December 2015.

During the second quarter, retail sales rose 3%, boosted in part by growth from New York Bakery frozen garlic bread, Sister Schubert’s frozen dinner rolls, Flatout flatbread and Reames frozen noodles. Operating income was boosted in part because of lower commodity costs, especially eggs.

Lancaster Colony Corp. brands
During the second quarter, retail sales rose 3%, boosted in part by growth from Flatout flatbread and Reames frozen noodles.

“While the top-line headwinds of customer rationalization and deflationary pricing remained as expected for our food service channel in the second quarter, we were pleased with the uptick in retail channel sales from our frozen bread and pasta products,” said John B. Gerlach Jr., chairman and chief executive officer. “Looking ahead, commodity costs are expected to turn flat to modestly unfavorable in the back half of the fiscal year. We also expect continued deflationary pricing in the food service channel and ongoing softness in the food service industry, particularly the casual dining segment, to impact fiscal third-quarter sales growth.  In addition, this year’s fiscal third quarter will reflect some shifting of retail sales volumes to our fiscal fourth quarter as a result of the later Easter holiday.”

The company said the third quarter also will include a $17.7 million pre-tax charge related to the company’s withdrawal from an underfunded multi-employer pension plan.

In a Jan. 26 conference call, Mr. Gerlach said the plant involved was a New York Bakery facility in Bath Bedford Heights, Ohio.

Angelic Bakehouse products, Lancaster Colony Corp.
Lancaster Colony's acquisition of Angelic Bakehouse closed Nov. 17.

Mr. Gerlach said the acquisition of Angelic Bakehouse, a baker of sprouted grain baked foods, closed Nov. 17.

“The integration process is progressing well,” he said. “We look forward to our pursuit of future growth opportunities for that business.”

For the first half of fiscal 2017, net income was $72,356,000, equal to $2.64 per share, up 16% from $62,139,000, or $2.27. Sales were off slightly, at $618,134,000, versus $618,854,000 in July-December 2016.