Flowers Foods’ Tasty Baking acquisition helps sales rise in Q2
The company also expects to be given further a boost in the next quarter when sales from Flowers’ Lepage Bakery acquisition are added.
The firm behind the Nature’s Own brand posted sales of $682m in Q2 up, 6.1% compared to the same period last year. Adjusted operating profit was up 4.3% to $28.4m.
Flowers president Allen Shiver said in the company’s Q2 earnings call: “Acquisitions continue to be an important factor in our sales growth.”
The company's $165m Tasty Baking acquisition in April last year contributed 4.5% of Flowers’ total 6.1% sales growth during the quarter.
Flowers announced in April that it was to invest $31m in a factory in Pennsylvania that it acquired through its Tasty Baking takeover. The expansion is expected to include a new bread production line that allow Flowers’ Nature’s Own brand to move into new markets. (See HERE)
Market expansion
Flowers is aiming to foster growth by moving into new markets in the US.
It has set a goal for its fresh breads, buns, rolls and snack cakes to reach 75% of the US population by 2016. Around 70% of the population currently has access to Flowers products and the company expects to reach its 75% target through its recent Lepage Bakery acquisition.
Last month, Flowers Foods completed its $370m acquisition of organic bakery firm Lepage Bakeries.
The deal is set to boost Flowers’ presence across the north east of the US and will add $166m to annual net sales.
Industry consolidation
Flowers’ chairman and CEO George Deese said: “The major issues we face today are commodities, industry consolidation, and competitive dynamics in the marketplace.”
“Looking longer term, our industry will need better margins for investments in bakeries, in products, brands, technology, and our people.”
Outlook
Flowers has adjusted its sales outlook for fiscal 2012 to include the Lepage acquisition. It now expects 2012 sales to increase between 7% and 9% over 2011 with Lepage accounting for 2.5% of the increase.
The company expects to incur around $4.5m to $5m transaction costs in the next quarter (Q3), bringing full year acquisition spend to around $8 million.
