Hillshire swings to $93M Q3 profit
CHICAGO – Hillshire Brands Co. posted net income of $93 million for the fiscal third quarter, reversing a $3 million loss in the same quarter a year ago.
Results included $51 million in net income from discontinued operations, compared to a $30 million loss in the year-ago quarter.
Net sales eased 1.3 percent to $924 million on weak performance in the Foodservice/Other segment, according to the company.
Net sales and volume in the Retail segment were flat compared to the third quarter a year ago, but investments in marketing and innovation produced sales and volume growth in the company’s meat-centric portfolio.
Jimmy Dean had a strong performance behind increased MAP spending which drove growth in breakfast sandwiches and bowls. Ball Park grew on the strength of Flame Grilled Patties. Increased MAP spending behind the product drove sales, the company said. The Aidells and Gallo brands continued to grow on new product launches.
Sales of Hillshire Farm lunchmeat declined after the company pulled back MAP spending and merchandising support to accommodate the supply chain transition to the new lunchmeat package. Hillshire said the transition to the new packaging was more challenging than expected, however the company plans to address these challenges in the fourth quarter.
Reported net sales in the Foodservice segment slipped 5 percent compared to the comparable prior-year quarter. Unfavorable mix and lower pricing offset increased volumes from commodity turkey sales, the company said. Hillshire’s foodservice customers struggled with macroeconomic pressures and "weak industry trends" that continued to challenge the segment.
“We continue to make progress in executing our three-year plan, making strides in brand building, innovation and rigorous cost management,” said Sean Connolly, president and CEO.
“We saw a strong response where we increased our advertising investment in the quarter. We also continued to build out our innovation pipeline. On the cost side, we have now identified opportunities to exceed the $100 million savings target we announced at our investor day in June. These initiatives will provide additional support for our growth strategy and further strengthen our confidence that we will deliver our mid-term targets.
“Our efforts to stabilize challenged businesses also progressed, but clearly our work here is not done. Overall, we are pleased with our efforts to date. In fact, we now expect full year EPS to be at the high end of our previous guidance,” added Connolly.