Hain overcomes challenges to deliver record sales

by Monica Watrous
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A voluntary recall of MaraNatha nut butters was a setback during the first half of Hain's fiscal year.

LAKE SUCCESS, N.Y. — The top executive of the Hain Celestial Group, Inc. now believes the bad luck is behind him.

After a major product withdrawal for MaraNatha nut butters and a plant fire that disrupted the Tilda rice business during the first half of the fiscal year, Irwin Simon, the company’s founder, president, chief executive officer and chairman, suffered a personal accident that led to knee surgery.

“So things happen in threes; now with all that behind us only look for good things in the near future,” Mr. Simon said during a Feb. 4 earnings call with financial analysts to discuss second-quarter performance. “But even with a few challenges in the quarter, which we believe are all transient in nature, we are still able to stay focused and capitalize on our growth opportunity, which shows the strength of Hain, our team, our brands, our diversified customer base and how well-positioned we are in the healthy living category. We have demonstrated our ability to deliver despite all these obstacles.”

Consumer demand for healthy products helped the company deliver record net sales, even amidst foreign currency headwinds that affected international results. For the second quarter ended Dec. 31, 2014, Hain Celestial had net income of $44,575,000, equal to 44c per share on the common stock, up 8.1% from $41,231,000, or 42c per share, for the comparable period.

The company delivered its 17th consecutive quarter of year-over-year double-digit sales growth with net sales of $696,383,000, a 30% increase from $534,879,000 for the year-ago quarter.

“We feel more optimistic about Hain today than ever before,” Mr. Simon said. “Ninety-nine per cent of our food products don’t contain G.M.O.s, over 500 of our products have been verified, and nearly 650 are enrolled in the Non-G.M.O. Project.

“We also have over 500 gluten-free products today. At Hain Celestial US alone, over 50% of our products were certified organic by U.S.D.A. as of the calendar year.”

Hain Celestial is regaining distribution, consumption and brand share for its MaraNatha products, which were voluntarily recalled in August following a Salmonella scare.

“We expect the MaraNatha nut butter business will be very well-positioned both on retailers’ shelves as well as in consumers’ minds as we enter into fiscal year 2016,” said John Carroll, executive vice-president and c.e.o. of Hain Celestial US.

Executives said the company’s Tilda plant, where a fire in November caused smoke and water damage to equipment, will be fully operational later this year. In the meantime, Hain Celestial is working with co-packers to distribute the products. By the end of the fiscal year, Mr. Simon said Tilda products will be sold in major club stores and retailers in the United States.

Additionally, the company is set to introduce more than 75 new products at Natural Products Expo West in Anaheim, Calif., in March. Launches include Celestial ready-to-drink chai tea lattes, Sensible Portions puffed snacks made with vegetables, Dream chocolate-covered coconut bites, Imagine chilled soups and BluePrint chard basil collard greens pressed juice.

“And stay tuned for BluePrint soups, too,” Mr. Simon said. “If you can cleanse with juice, you can cleanse with soup.”

For the second quarter, Hain Celestial US recorded net sales of $353,969,000, up 10% over the prior year’s quarter after adjusting for the nut butter recall. Distribution gains are driving success for the segment. The company announced a deal this spring with 7-Eleven to carry Sensible Portions snacks in the convenience chain’s stores.

Productivity remains a strategic initiative for the company, which expects to achieve at least $55 million in worldwide productivity savings and had more than $11 million of productivity savings during the second quarter.

“We believe we are well-positioned for another record second half and future growth and long term,” Mr. Simon said. “Our executive team remains committed to increasing shareholder returns and our balance sheet provides us with the financial flexibility for us to pursue strategic M.&A. activities on a global basis.”

For the first half of the year, Hain Celestial earned $63,430,000, or 63c per share, down 7.9% from $68,886,000, or 71c per share, in the same period of the previous year. Net sales for the six months were $1,327,640,000, up 31% from $1,012,363,000 the year before.
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