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Pinnacle Posts Positive Results, as Frozen Sales Dip 2.9%

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Pinnacle Foods Inc. has reported results for the first quarter ended March 26, 2017, during which time net sales increased 1.6% versus year-ago receipts, despite the unfavorable impact of Easter shifting to the second quarter.

The Parsippany, New Jersey, USA-headquartered company attributed the rise in turnover to strong growth in its Boulder segment, including the carry-over benefit of the Boulder Brands acquisition (three extra weeks), and a solid performance in the grocery segment. Composite market share advanced 0.8 share points versus year-ago, marking the 12th consecutive quarter of share gains.

birds eye steam freshNet sales generated in the frozen segment decreased 2.9% to $320.9 million in the first quarter, compared to $330.5 million in the year-ago period. This reflected a lower volume/mix of 4.3%, largely due to the Easter timing impact on the Birds Eye franchise and seafood, as well as the anticipated volume softness early in the first quarter of 2017 resulting from the exceptionally strong Birds Eye performance in the fourth quarter of 2016. Partially offsetting these timing impacts were higher net price realization of 0.8%, acquisition carry-over benefit of 0.4% and favorable foreign currency translation of 0.2%.

Market share for the segment remained strong, with Birds Eye vegetables and Birds Eye meals gaining 1.7 and 1.9 market share points, respectively, on broad-based strength across each portfolio. In a move to maintain momentum behind Birds Eye, early in the second quarter of 2017 the company began the rollout of five new platforms – namely, Birds Eye Veggie Mashers, Birds Eye Vegetable Pasta, Birds Eye Super Food Blends, Birds Eye Organic, and Disney-themed Birds Eye Voila!.

Earnings before interest and taxes (EBIT) for the frozen segment decreased 0.8% to $50.9 million in the first quarter of 2017, compared to $51.3 million in the first quarter of 2016, largely reflecting the impacts of input cost inflation, lower net sales and items affecting comparability, partially offset by strong productivity. Adjusted EBIT advanced 3.9% to $51.9 million, compared to $49.9 million in the year-ago period.

Net sales for the grocery segment increased 3.4% to $259.4 million in the first quarter, while net sales for the Boulder segment climbed 21.4% to $97.3 million in the same period. Boulder’s performance reflected acquisition carry-over benefit of 19.0%, favorable net price realization of 3.8% and higher volume/mix of 1.7%. Partially offsetting these growth drivers was a 3.1% decline resulting from the wind-down of the Boulder Brands UK operations.

Net sales growth across the segment reflected particular strength of the Gardein and EVOL brands, while retail consumption in the quarter advanced 4.2%, despite the segment’s SKU rationalization program. 

EBIT for the Boulder segment totaled $6.7 million in the first quarter of 2017, compared to a loss of $4.5 million in the first quarter of 2016, primarily reflecting the favorable impact versus year-ago of items affecting comparability, largely related to the Boulder Brands acquisition, as well as the favorable impacts of the net sales growth and synergies, partially offset by input cost inflation.  Adjusted EBIT increased 43.5% to $13.2 million, compared to $9.2 million in the year-ago period.