TreeHouse Foods Projects Lower-than-Expected 4Q Earnings

January 27, 2012
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Although they’re disappointed in how they finished 2011, officials from Oak Brook IL-based private label processor TreeHouse Foods said private label sales are making for a solid start to 2012. The company announced Jan. 20 that it expects fourth quarter earnings of between 84 and 87 cents per share, well below analyst expectations of $1.07 per share.



The company's fourth-quarter retail channel volumes decreased 4 percent, according to a press release on its website, mainly due to an 8 percent decline in December volumes, which officials described as “well below historical levels.” TreeHouse offerings include such cold-weather foods as hot cereals, non-dairy creamers and soups.


TreeHouse officials believe the volume decline was driven by three main factors: a reduction in consumer food purchases; a sales shift away from traditional grocery customers toward alternate channel retailers; and a negative effect of warm weather in the Midwest and Northeast on seasonal sales.


In the last four- and 12-week periods of 2011, officials said in the press release, consumers significantly reduced food purchases within measured channels, as evidenced by industry data indicating branded food volume declines of 5.9 percent and 5.3 percent, respectively. Similarly, they said, private label sales also decreased, but at lesser rates of 3.7 percent and 1.7 percent, respectively.


"We are disappointed in our finish to the year, especially after engineering a mid-year recovery in our private label revenues and margins,” said Sam K. Reed, Chairman, President and CEO of TreeHouse Foods in the press release. “Our turnaround was derailed by a sudden drop in volume that affected TreeHouse and the whole of the packaged foods industry, as consumer purchases of shelf stable dry groceries for the fourth quarter showed their sharpest decline in six years.


"Having struggled throughout 2011, we believe that we will overcome this setback and resume steady growth in the year ahead. To this end, we are off to a promising start at mid-month with retail grocery private label shipments and orders up approaching double digits over January of last year."



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