Hillshire profits strong

Hillshire profits strong

- Investments in brand building, innovation and marketing get positive response. - Ball Park, Jimmy Dean and artisanal brands grow. -

THE Hillshire Brands Co. has reported strong profitability for its fiscal 2013 third quarter compared with a loss in its year-before third quarter, explaining that investments in its brands and operations are succeeding.

"We continue making progress in executing our three-year plan and making strides in brand building, innovation and rigorous cost management," chief executive officer and president Sean Connolly said.

He added that wherever the company invested in advertising and promotions, the response was positive.

Connolly said the company also continues to make progress in its process "to stabilize challenged businesses" but has more work to do to bring around those operations and products.

Hillshire's results are shown in the Tables.

The company noted that sales were down slightly due to a decline in its foodservice segment.

For its retail segment, Hillshire said sales volumes and sales were flat compared to the previous third quarter, with improvements in mix and pricing offset by investments in innovations.

However, the company said its meat-centric portfolio continued to grow: Ball Park grew on spending to build Flame Grilled Patties, Jimmy Dean grew on spending to drive breakfast bowls and sandwiches and artisanal brands such as Aidells and Gallo grew from new product launches.

The company said Hillshire Farm luncheon meat sales declined, as anticipated, since marketing money was pulled back to accommodate the development of improved lunch meat packaging — a process that has proved more difficult than expected.

The company said frozen bakery sales were off because of the planned discontinuance of low-margin products.

For its foodservice segment, Hillshire said sales declined as increased turkey sales were offset by an unfavorable mix of products and lower pricing across the segment.

There were "pockets of growth" in the segment, including growth in the convenience store and dessert categories, the company said, but continued industry weakness and macroeconomic pressures on customers remained problematic.

Connolly noted that Hillshire announced in June last year an effort to identify $100 million in cost savings between fiscal 2013 and 2015 and said, at the time, it already had initiatives in place to account for $65 million of those savings. He noted that the company has now identified the remaining $35 million.

Connolly said these initiatives will "unlock" efficiencies in revenue management and supply chain and support processes to fuel the company's growth over the next several years.

Hillshire, headquartered in Chicago, Ill., was established last year when Sara Lee Corp. spun off its international coffee and tea business and its meat product business into independent, separate companies (Feedstuffs, July 9, 2012).

Hillshire is projected to have first-year sales totaling $4 billion.

In addition, the board of directors of Hillshire announced that it has authorized a cash dividend of 12.5 cents per share on the company's common stock, payable July 8 to holders of record June 3.

 

1. Hillshire Brands earnings and sales*

 

-Third quarter-

-Nine months-

 

2013

2012

2013

2012

Sales (million $)

924

935

2,958

2,975

Earnings (million $)

93

(3)

211

246

Earnings per share ($)

0.75

(0.02)

1.72

2.07

 

2. Hillshire Brands operating results (million $)*

 

-Third quarter-

-Nine months-

 

2013

2012

2013

2012

Retail sales

692

691

2,188

2,150

Foodservice sales

232

244

770

831

Retail income

7473

272

202

 

Foodservice income

8

16

61

70

*For the quarters ended March 30, 2013, and March 31, 2012.

 

Volume:85 Issue:19

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