OAK BROOK, ILL. — Higher freight, transportation, packaging and other input costs bogged down second-quarter earnings at TreeHouse Foods, Inc. Net income for the quarter ended June 30 was $14,345,000, equal to 40c per share on the common stock, down 34% from $21,652,000, or 62c per share, in the second quarter of fiscal 2010.
TreeHouse said its second-quarter results included three unusual items that affected earnings: a 4c per share charge associated with the consolidation of facilities, including the closing of its Springfield, Mo., plant and the integration of freight and warehouse operations into a consolidated distribution network; a 1c per share gain on the mark-to-market adjustment of an interest rate swap; and a 1c per share charge associated with the integration of Sturm Foods and S.T. Specialty Foods.
Sales for the most recent quarter were $492,620,000, up 10% from $446,195,000.
“Our very strong sales in the quarter were overshadowed by the negative impact of rapidly rising input and transportation costs on our gross margins,” said Sam K. Reed, chairman and chief executive officer. “We have aggressively pursued price increases to offset these costs, and have succeeded in achieving the pricing necessary to recover our margin shortfalls over the back half of the year.”
Operating income within TreeHouse’s North American Retail Grocery business rose 4% to $54,102,000 from $52,218,000, while sales increased 14% to $350,861,000 from $307,526,000. The sales gain reflected the acquisition of S.T. Specialty Foods. Additionally, TreeHouse said soup and hot cereals sales were up significantly in the quarter with pickles, jams and spreads, dressings and aseptic sauces also showing good sales growth.
Operating income within Food Away From Home was $10,089,000, down 20% from $12,608,000. Sales were down 1% at $79,179,000, as the company exited a certain unprofitable processed pickle business.
Looking ahead to the remainer of fiscal 2011, Mr. Reed said TreeHouse still expects earnings per share of 80c to 85c for the third quarter and $2.90 to $3 for the full fiscal year.
For the six months ended June 30 net income was $34,153,000, or 96c per share, down 10% from $37,971,000, or $1.10 per share, in the same period of fiscal 2010. Net sales were $986,133,000, up 17% from $843,319,000.