Upward trek for Snyder's profits interrupted

by Josh Sosland
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CHARLOTTE, N.C. — After rising steadily the previous four years, net income of Snyder’s of Hanover was weaker in the first quarter of fiscal 2011 versus the same period a year earlier.

As part of the merger proxy filed with the Securities and Exchange Commission, financial results for privately-held Snyder’s were included. The Hanover, Pa.-based snack maker had net income of $5,547,000 in the 12 weeks ended June 20, down 7% from $5,940,000 a year earlier. Net sales were $159,753,000, up 3.2% from $154,737,000.

In fiscal 2010, year ended March 28, net income was $25,827,000, up 15% from $22,508,000. Sales were $677,675,000, virtually unchanged from $673,083,000.

The company’s growth in recent years has been bolstered by acquisitions, including Jays Foods/Select Snacks, acquired in December 2007; Grande Foods, acquired in April 2007; and an 80% stake in Michaud Distributors, Inc., acquired in October 2006.

Commenting on fiscal 2010 results, Snyder’s said its Grande and Krunchers! Brands did well in new markets while pretzels sold well in the grocery channel.

The 15% increase in net income was achieved despite 2010 charges of $5.8 million for a pending litigation settlement and $2.9 million of fees paid as part of a failed attempt to acquire a snack company in 2009.

“Favorable commodity prices throughout most of the fiscal year, lower fuel surcharges, higher utilization of Snyder’s manufacturing plants, as well as improved direct-store delivery execution, helped to offset these costs and drive higher profitability,” the proxy said.

Reviewing accomplishments in fiscal 2010, Snyder’s noted that market penetration of the company’s pretzels in U.S. supermarkets topped 40%; the company developed renewable, plant-based packaging; and products in the Snyder’s Natural’s line were relaunched.

Gross margin in fiscal 2010 widened to 33.6% in fiscal 2010, up from 32% a year earlier but in line with 33.1% in fiscal 2008.

The better margins this year were attributed to stepped-up pretzel production at Hanover; and increased efficiencies on Grande and Krunchers! products at the Jeffersonville, Ind., plant; improved production efficiencies at the Goodyear and Jeffersonville plants; and elimination of unprofitable business at the Jeffersonville plant.

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