TreeHouse Foods Inc. (THS) Friday reported an increase in profit for the fourth quarter, helped mainly by higher revenues and lower operating costs. However, earnings for the quarter fell short of estimates as margins declined significantly.
Moving forward, the food products company detailed its guidance for the full year 2012, with earnings expected to miss current Street estimates, while revenues are forecast to come in ahead of expectations.
Oak Brook, Illinois-based TreeHouse's profit improved to $29.9 million or $0.81 per share from $28.1 million or $0.77 per share a year earlier. On an adjusted basis, earnings rose to $0.85 per share from last year's $0.80 per share. On average, 15 analysts polled by Thomson Reuters expected earnings of $0.87 per share for the quarter. Analysts' estimates typically exclude one-time items.
TreeHouse's gross margins for the quarter declined 290 basis points due to higher costs in its pickle business and operating inefficiencies at some of the plants.
Chief Executive Sam Reed said, "Having completed a detailed review of our category margins and channels of distribution, we believe that the shift toward alternate channels like club, limited assortment and dollar stores had a secondary effect on our margins in the quarter."
TreeHouse, which sells canned soup, instant oatmeal and powdered coffee creamer, said net sales for the quarter grew to $535.8 million from $509.5 million last year. Street analysts on consensus estimated revenues of $535.82 million for the quarter.
"We believe that changing customer dynamics, continued consumer weakness, as well as unseasonably warm weather, hurt our top line in the quarter," said Reed.
Selling, distribution, general and administrative expenses dipped 18.7 percent to $50.2 million from $61.7 million last year on lower incentive compensation and acquisition costs.
Looking forward to the full year 2012, TreeHouse expects adjusted earnings in a range of $3.00 to $3.15 per share. Analysts currently estimate earnings of $3.20 per share for the full year.
The company expects revenues to increase 8 to 9 percent, driven primarily by a combination of pricing and 2.5 to 3.5 percent of volume growth. Analysts currently estimate revenues of $2.15 billion for the full year. TreeHouse had reported revenues of $2.05 billion for the full year 2011.
TreeHouse expects 2012 to be a year of moderation, but also one that will be much less volatile. The company said that despite indications for higher costs primarily in the first half of the year, it anticipates input costs to stabilize as the year progresses.
THS is currently trading on the NYSE at $58.11, up $3.04 or 5.52%, on a volume of 0.6 million shares.
For comments and feedback: editorial@rttnews.com