JBS SA, the world’s biggest beef producer, may turn its $7.1 billion Pilgrim’s Pride unit into the parent of U.S. operations in a so-called reverse merger after postponing an initial public offering of JBS USA, Chief Executive Officer Joesley Batista said.

“I would prefer to do the IPO of the U.S. unit, but a reverse merger of JBS USA and Pilgrim’s is possible,” Batista told reporters in Sao Paulo, reports Bloomberg.

JBS is weighing the transaction to prevent Brazil from taking greater control of the company after the BNDES state development bank bought $2 billion of convertible bonds, a person familiar with the situation said in an interview last month. The bonds are convertible into JBS stock if the Sao Paulo-based company fails to hold an IPO of JBS USA by 2011.

Source: Bloomberg, Foodmarket.com

Bob Evans Q1 results affected by slow sales, sow costs

Bob Evans Farms Inc. announced financial results for the 2011 first fiscal quarter ended Friday, July 30, 2010.

Chairman and CEO Steve Davis said the company's first quarter was in line with its expectations, reflecting top-line challenges in the restaurant segment and cost pressures in the food products segment.

"As expected, our first quarter was very challenging," Davis said. "However, cost-savings initiatives helped offset record-high sow costs and negative leverage from lower sales.

"We anticipate significant improvement in the second half of the year," Davis said. "Our food products segment plan calls for sales gains resulting from pricing increases implemented early in the second quarter and cost savings related to manufacturing productivity initiatives. We also expect gradual sequential top-line improvement in the restaurant segment during the second, third and fourth quarters due partly to menu innovation. Accordingly, we are reaffirming our guidance for fiscal 2011."

The company reported consolidated operating income of $21.4 million, or 5.2 percent of net sales, in the first quarter of fiscal 2011, compared to operating income of $25.1 million, or 5.9 percent of net sales, in the first quarter of fiscal 2010. The decrease was due primarily to deleverage from a decline in sales in both business segments and record-high sow costs in the food products segment.

Net sales were $412.6 million in the first quarter of fiscal 2011, a 3.9 percent decrease compared to $429.5 million in fiscal 2010. This decrease was primarily the result of same-store sales declines at Bob Evans Restaurants and Mimi's Cafe.

The restaurant segment reported operating income of $21.4 million, or 6.2 percent of net sales, in the first quarter of fiscal 2011, compared to operating income of $20.4 million, or 5.7 percent of net sales, in fiscal 2010. This improvement is due to lower cost of sales, lower operating wages, and lower SG&A expense, partly offset by higher other operating expenses and the overall impact of deleverage from lower sales. The restaurant segment reported net sales of $343.1 million, a 4.6 percent decrease compared to $359.8 million in the first quarter of fiscal 2010. Same-store sales at Bob Evans Restaurants decreased 3.5 percent in the first quarter of fiscal 2011.

"In an effort to drive sales, Bob Evans Restaurants shifted a portion of first-quarter advertising dollars from core markets to regions that have been losing share," Davis said. "However, this strategy did not improve sales trends. As such, we will now allocate funds based on market contribution, instead of spending disproportionate amounts in underperforming markets. This is more consistent with our historical approach."

Reported operating income for the food products segment was $29,000, essentially breakeven, in the first quarter of fiscal 2011, compared to $4.8 million, or 6.8 percent of net sales, in fiscal 2010. The operating income decline is due to a 38 percent year-over-year increase in sow costs, as well as higher plant labor, transportation costs and administrative salary expense.

The food products segment's net sales were $69.5 million, down 0.3 percent compared to $69.7 million in the first quarter of fiscal 2010. Comparable pounds sold decreased 2 percent compared to the first quarter of fiscal 2010. Partly offsetting the impact of the decrease in comparable pounds sold was a $3.1 million, or 26.2 percent, year-over-year decrease in promotional discounts provided to retailers.

On Aug. 9, the Company closed its Galva, Ill., facility due to overcapacity in its fresh sausage manufacturing plants. The Company plans to redistribute production from Galva to its remaining four fresh sausage processing plants in Hillsdale, Mich.; Bidwell, Ohio; Xenia, Ohio; and Richardson, Texas. Galva accounted for 20 percent of the Company's total fresh sausage processing capacity.

"We cannot achieve our traditional food products segment operating margins, given our current fixed cost structure and with sow costs at record highs," Davis said. "And with diminishing supply in the sow market, we are unable to run our fresh sausage processing facilities at optimal production levels. Accordingly, we must identify and implement cost-savings from manufacturing productivity initiatives to remain competitive in the fresh sausage market."

The Company will record a charge of approximately $2 million in its second quarter, resulting from severance and other costs related to the closing of the Galva facility.

Source: Bob Evans Farms Inc.

Proposed Quad Cities slaughterhouse stirs controversy

A proposed slaughterhouse in East Moline, Ill., is running into problems with critics who claim the building will create environmental damage, lost property values and bad odors. Supporters, including the town’s mayor, say it will create jobs and bring economic revitalization to the area.

The project proposed by Triumph Foods would bring 2,500 jobs to the area, according to Mayor John Thodos. The Chicago Tribune reports that the unemployment rate in the area has doubled within the last five years. Triumph has stated in the past that it already has contracts with suppliers for hogs that will be raised in confinement specifically for the plant.

Critics are questioning the plant’s location, among other issues. The building would be close to the Rock River and wetlands, they note.

"It's a huge plant being built on a wetland and a flood plain that could end up flooding nearby homes," said Jerry Neff, chairman of the local Sierra Club.

Critics also say the plant would encourage an influx of large hog farms that would contribute to environmental problems and wipe out smaller operations. The facility will "increase demand for food animals that will probably be met by factory farms in Illinois," said Max Muller of Environment Illinois, a nonprofit advocacy group. "We already have … all sorts of environmental problems from factory farms. Until we clean up regulation of factory farm pollution, we don't want to be furthering demand for the products from them."

The initial idea for the slaughterhouse was proposed back in 2005, and it has been endorsed by several state politicians. Triumph bought 116 acres in East Moline in 2007.

Source: Chicago Tribune

GMA announces keynote speaker for Pack Expo conference

The Grocery Manufacturers Association has announced that Alan D. Wilson, president and CEO of McCormick & Co., will be the keynote speaker at the group’s Manufacturing Excellence Conference. The conference, which is co-located with Pack Expo, will be held Nov. 1-2 at McCormick Place in Chicago.

Wilson joined McCormick in 1993 as director of procurement for retail products, and the following year was promoted to vice president, corporate procurement. He has since served a variety of roles within the company, gaining an understanding of the different facets of McCormick operations from supply chain to leadership of various business units.

During his tenure at McCormick, Wilson has held several executive management roles including president – Tubed Products, president – McCormick Canada, president – North American Consumer Products and, most recently, president & chief operating officer. Prior to joining McCormick, Wilson worked for nine years at Procter & Gamble, where he held progressively responsible positions in product supply.

Pamela Bailey, president & CEO, GMA, said Pack Expo is a critical component for GMA members planning and implementing business strategies. “GMA member companies have long valued Pack Expo as an important annual forum where they can gather with supply chain partners, garner key insights and learn about emerging trends from their counterparts upstream. With a focus on product safety, sustainability and operational integrity – critical issues for GMA and PMMI members - we are thrilled to launch the inaugural GMA Manufacturing Excellence Conference at this year’s Pack Expo,” she said.

Source: GMA

Red Robin named Best Burger by Zagat's

The results of Zagat's 2010 Fast Food Survey are in, and Red Robin Gourmet Burgers, Inc. was named "Best Burger" in the full-service chain category for the second consecutive year.

The Zagat results were based on the feedback and findings from 6,518 survey participants who rated 136 chains across the country, including 97 fast-food chains and 39 full-service chains. The surveyors ate at chain restaurants an average of 10.7 times per month.

"Consumers have spoken, and we are honored they recognize the outstanding quality of Red Robin's gourmet burgers for the second year in a row," said Susan Lintonsmith, Red Robin's chief marketing officer. "Red Robin's commitment to fresh and innovative ingredients is what makes our burgers taste so good and what keeps our guests coming back for more."

Source: Red Robin Gourmet Burgers