Hillshire's Connolly discusses transition year
Sept. 6, 2012
by Meat&Poultry Staff
DOWNERS GROVE, Ill. – A portfolio of strong core brands will be the centerpiece of Hillshire Brands’ three-year strategic plan for profitable growth, according to company officials recently speaking at the Barclays Back-to-School Consumer Conference in Boston.
“We are confident that our portfolio of leading retail brands presents significant untapped potential for profitable growth in the large and growing meat-centric meals and snacks markets,” said Sean Connolly, chief executive officer, Hillshire Brands Company. “With an experienced senior leadership team now in place, we are focused on executing our strategic plan to drive long-term growth and profitability though brand-building and margin-accretive innovation.
“Ultimately, we believe these efforts will create significant value for our shareholders,” he added.
The company’s core brands — Hillshire Farm, Ball Park, Jimmy Dean, State Fair, Aidells and Gallo — form a leading platform for delivering differentiated, value-added products to consumers. In addition to strengthening core brands, the company's strategic priorities will also include expanding through selective acquisitions. Hillshire Brands will launch new line extensions and product upgrades to further enhance the company's portfolio, according to the company.
The company will also support its products by increasing expenditures for marketing, advertising and promotion (MAP). The increased MAP spending is expected to drive revenues from new innovations¹ to between 13 percent and 15 percent of total revenue by fiscal 2015; up from historic levels of 9 percent of revenue, the company said.
"This year, we are already seeing progress against our plans, and continue to work aggressively to strengthen the challenged portions of our portfolio like lunchmeat and foodservice bakery," Connolly said. “As a transition year, the initiatives we pursue in 2013 will strengthen our brands, reduce costs and fill our innovation pipeline. We are fully committed to making these investments as we position Hillshire Brands to achieve our targets for 2015 and beyond.”
Earnings guidance included adjusted earnings per share (EPS) for continuing operations of $1.47 for fiscal 2012 compared to $1.20 for fiscal 2011 and on a reported basis, ($0.18) for fiscal 2012 compared to $0.45 for fiscal 2011, according to Maria Henry, chief financial officer of Hillshire Brands.
Henry confirmed fiscal 2013 guidance of net sales in line with fiscal 2012, and adjusted EPS in the range of $1.40 and $1.55. Earnings targets for the company are:
• volume growth of 2 percent to 3 percent;
• net sales growth of 4 percent to 5 percent;
• 5 percent MAP spending as percent of total revenue; and
• operating margin of 10 percent.
“We continue to look at 2013 as a transition year with increased potential for variability that may impact our performance,” Henry said. “Our top priority is investing in our business in order to create sustainable, long-term shareholder value, and we believe we are well-positioned to do so with our strong balance sheet and attractive underlying cash flow.”
Read more about Sean Connolly’s vision for Hillshire Brands in the September issue of Meat&Poultry.