Adjusted earnings excluding “significant items” recorded in both years, Hillshire net income in the first quarter was $43 million, down 27 percent from $60 million.
Sean Connolly, president and CEO of Hillshire, expressed satisfaction both with the quarter and with how the company is positioned moving forward.
“I’m pleased to report a solid start to the year,” Connolly said. “Although input cost inflation has been significantly higher than anticipated, we continue to make good progress with our brand-building efforts. In particular, I`m encouraged by the overall strong consumption trends we`ve seen.
“As we’ve moved into the second quarter, we’ve begun to take additional pricing actions. While this will pressure volumes as consumers adapt to higher price points, we still expect sales trends to improve in the second half behind a robust innovation slate. We also still expect gross margins to improve in the second half, fueled by both our pricing actions and our cost efficiency programs. Accordingly, our full year guidance remains unchanged at this time.”
Pressuring operating income during the quarter were elevated input costs and what the company described as unusually low selling, general and administrative costs in the first quarter last year.
In the Hillshire retail business, net sales fell 0.7 percent from a strong first quarter in fiscal 2013.
Highlights in the quarter were gains for Jimmy Dean (sales and volume) and Ball Park (sales) as well as the Aidells brand. Jimmy Dean was boosted by double-digit growth in breakfast sandwiches as well as in the frozen protein breakfast category. Ball Park benefited from a strong grilling season.
During the quarter, Hillshire bought back 300,000 shares of stock.