Baking industry’s companies stand out as focused

by Josh Sosland
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The most recent financial reports issued by leading baking companies suggest an improvement in the operating environment as gauged by several important metrics, including net earnings growth. At the same time, profit margins for the two leading U.S. baking companies have not yet reached their respective targets and top-line results remain under pressure.

While grain-based foods companies continue to face challenges, a Wall Street analyst report focusing on Snyder’s-Lance, Inc. offers important perspective. The Deutsche Bank report credits the salty snacks company for success in broadening distribution and enhancing profit margins but wonders whether the progress will be sustained ahead. Telling, though, was merger-acquisition speculation whether Snyder’s-Lance was likely to be a buyer or an acquisition target ahead. While numerous qualities were cited that could make Snyder’s-Lance a tempting target for consumer packaged foods giants, the analyst concluded that major challenges or distractions made such a move unlikely for the foreseeable future. Instead, the analyst predicted Snyder’s-Lance, a company with a strong balance sheet, is more likely to be a buyer.

A broad survey of the largest packaged foods companies suggest a similar pattern. Many continue to struggle trying to find the right mix of product lines. Even as they grapple with numerous challenges, Snyder’s and many other grain-based foods companies do so with a clear-eyed view of the promising strategies their companies are pursuing.

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