Pinnacle Frozen Sales Up 2.5%; Q2 Dividend Rises 14%
Pinnacle Foods has authorized a 14% hike in its quarterly cash dividend, payable on October 9 to shareholders of record at the close of business on August 29. On an annualized basis, the new dividend increases to $1.30 per share, from the previous annualized rate of $1.14.
The Parsippany, New Jersey, USA-headquartered diversified food company, which employs approximately 5,000 people across the USA and Canada, rang up more than $3 billion in sales last year. It produces and markets a wide variety of household name frozen product brands, among them Birds Eye vegetables, Hungry-Man ready meals, Evol entrees, Gardein plant-based protein dishes, Van de Kamp's and Mrs. Paul's prepared seafood, Lender's bagels and Celeste pizza.
The Birds Eye label, which includes value-added Birds Eye Voila! skillet meals and Superfood Blends, generated double-digit gains in the second quarter ending on June 25, 2017. The company’s total sales, however, slipped by 1.7% to $744.6 million compared to the same period a year ago. Net earnings declined 39% to $18.6 million, while gross profits slid 26% to $164.4 million.
The downturn was attributed in part to the removal of a number of Aunt Jemima frozen breakfast products from the market following the recall of 18 retail and foodservice SKUs last year due to food safety-related issues. The company has since eliminated “certain low-margin and non-strategic Aunt Jemima frozen breakfast products” from its portfolio.
Meanwhile, investments are being made to bolster brands with long-term growth opportunities, such as Birds Eye. As part of this strategy, a frozen food warehouse and vegetable packaging facility was recently acquired in Beaver Dam, Wisconsin, from Ryder Integrated Logistics for $37.5 million. The facility will be linked in to Pinnacle’s supply chain network later this year, and “is expected to drive productivity and margin enhancement.”
Solid Frozen Results
Overall net sales for Pinnacle Foods’ frozen segment increased 2.5% to $295.9 million during the second quarter of 2017, compared to $288.8 million in the year-ago period, despite a negative impact of 4% resulting from the Aunt Jemima episode. Also contributing to the performance was volume/mix growth of 9.2%, reflecting strength of innovative product launches and the benefit of a later Easter holiday this year, partially offset by lower net price realization of 2.4% and unfavorable foreign currency translation of 0.3%.