The manufacturer – which sells products under brands including Snyder's of Hanover and Lance – has also set a date for shareholders to vote on its proposed acquisition of Kettle potato chips owner Diamond Foods (see box below).
The unaudited results, for the year ending January 2 2016, show top-line growth of around 4% to $1.66bn (when adjusted for the 53rd week in 2014, which accounted for $30m revenue).
Core brands grow
Performance was driven by a 6.5% year on year increase in sales of the manufacturer’s core brands - Snyder's of Hanover, Lance, Cape Cod, Snack Factory, Pretzel Crisps and Late July – which all gained market share, said the company.
Synder’s-Lance also reported improved operating margins for the full year, accelerating in the fourth quarter to an estimated 200 bps improvement over the prior year.
However, fourth quarter net revenue is expected to be $406m versus the $430m at the lower end of the company’s guidance. Factors contributing to the shortfall include an extended power outage at one of Snyder-Lance’s largest bakeries following a storm, resulting in contract manufacturing and branded sales losses. The business also lost branded revenue as a result of strategic changes at one of its large customer that impacted space, displays and inventory levels.
New revenue opportunities
“While we are experiencing an overall tougher retailing environment, the issues related to the bakery shutdown are completely resolved and we continue to push for ways of developing new revenue opportunities with our largest customers,” said Snyder’s-Lance president and chief executive officer Carl E Lee, Jr.
Adding that he remained positive about its prospects for 2016 and beyond, Lee said focuses for the year would be top line sales and driving efficiency through the business’s Drive for 10 cost savings initiative.
Excluding any benefits from the acquisition of Diamond Foods, Snyder’s-Lance is expecting net revenue growth of between 2% and 4% in 2016.
Date set for Kettle acquisition vote
Synder’s-Lance and Diamond Foods stockholders will vote on February 26 on whether to approve the merger of the two manufacturers.
The businesses announced last October that Snyder’s-Lance would acquire all shares of Diamond in a cash and stock merger transaction for around $1.91bn.
The deal would help expand the Snyder’s-Lance snack range with premium potato chips Kettle, Emerald Nuts and Pop Secret Popcorn, Mintel Food and Drink insight director Marcia Mogelonsky told BakeryandSnacks in December, when the deal’s antitrust waiting period ended.
“Even though it’s an expensive buy, Snyder’s-Lance’s stable of brands tends to lean towards the more mainstream, with Hanover Pretzels, Lance Snacks and Archway Cookies,” said Mogelonsky. “Now Snyder’s-Lance has a stake in just about every snack category and the acquisition will give them some better-for-you products with clean labels and non-GMO status - all important attributes sought by consumers.”
Snyder’s-Lance last night (January 27) said the acquisition would bring estimated annualized synergies from cost savings of $75m, with approximately $10 million to be re-invested in the company's growth plans.
“We are confident in our ability to drive cost synergies through the combination of our two businesses,” said Snyder’s-Lance president and chief executive officer Carl E Lee, Jr. “We believe top-line synergies will be a good source of growth for the combined company as we achieve greater operating scale and broaden our geographic reach."