Hillshire Farms starts fiscal 2013 with strong Q1 results
The Hillshire Brands Company reported earnings for its first quarter of fiscal year 2013. Adjusted net sales increased by 2% to $1.01 billion, while reported net sales declined 1.4%. Adjusted operating income increased 76.3% to $105 million, and reported operating income increased $60 million to $87 million. Hillshire noted a strong performance in the Retail segment, with sales growth of 3% and adjusted operating segment income growth of 45.5%.
"I am very pleased with our first quarter performance," said Sean Connolly,CEO, The Hillshire Brands Company. "Our volumes are moving in the right direction, our key brands are gaining strength, our costs are coming down and our team is markedly stronger. Overall, we are off to an encouraging start against our three-year plan to build a consistently growing and more profitable branded food company."
He added, "While we are pleased with this progress, we recognize that we are only one quarter into our year. We want to wait for greater visibility into the cost picture and see our momentum continue to develop further before making any changes to our outlook. Accordingly, our full year guidance, given on August 9, remains unchanged at this time."
Net sales in the Retail segment increased 3.0% in the quarter, driven by 2.3% volume growth. Adjusted operating segment income increased by 45.5%, primarily due to lower input costs and lower SG&A costs, reflecting the benefit of the company's cost reduction programs.
Jimmy Dean turned in a strong performance during the quarter, with double-digit sales growth. Ball Park also posted solid top line growth during the key summer hot dog season and the brand's new Flame Grilled Patties continued to perform well. Aidells continued to deliver strong double-digit growth and launched several new products, including hot dogs and all-natural salame. Each of these brands received strong MAP support, reflecting the company's commitment to brand building for the long-term.
In the first quarter, Foodservice/Other adjusted net sales declined 1.6%. While volumes increased, revenues declined on a less profitable sales mix and lower pricing tied to declining input costs. Adjusted operating segment income increased $3 million, as a result of positive price recovery and lower SG&A expenses.
The company's corporate expenses, excluding significant items, declined $14 million versus the first quarter of fiscal 2012, to $8 million. This reduction was driven primarily by an $8 million year-over-year increase in commodity mark-to-market gains, as well as cost savings initiatives, including headcount reductions.
Source: The Hillshire Brands Co.