Alongside our daily news coverage, features and interviews, the Just Food team sifts through the week’s most intriguing data sets to bring you a round-up of the week in numbers.
With the US earnings season upon as again, our data spotlight takes in Tyson Foods, BellRing Brands and Hain Celestial, as eyes turn to volume and margin recovery following the inflation-led price-induced revenue growth.
Pet food also features in Germany as the category remains in M&A mode post-Covid, while ice cream in Italy saw a company bought out of administration.
Tyson Foods “cautiously optimistic”
The US meat giant and better-for-you business Hain Celestial were both keen to emphasise this week the “sequential” comparisons in their results, instead of the customary year-on-year quarterly performance.
Tyson Foods said it was “cautiously optimistic” for 2024 after a “solid” set of first-quarter results, which on face value looked disappointing because of the price distortions and challenges a year earlier.
Sales revenue was up a meagre 0.4% at $13.3bn in the three months to 30 December and adjusted operating profit (non-GAAP) was down 9% at $411m from the year-earlier quarter.
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However, president and CEO Donnie King was keen to highlight the “sequential” performance from the fourth quarter, particularly with respect to adjusted operating income (AOI) amid the protein giant’s factory optimisation initiatives, which have largely been characterised by plant closures.
“The momentum we established in the back half of last year continued in Q1, highlighted by a $175m improvement in adjusted operating income, 130 basis points of AOI margin expansion, and near doubling of adjusted EPS, all on a sequential basis,” King explained.
“While I’m pleased by the performance in Q1, we still have more work ahead of us and we’re cautiously optimistic and laser-focused on achieving what we set out to do this year.”
Uncertainties remain over the outlook, nevertheless, as price pressures on consumers are expected to continue and as Tyson Foods faces competition from private label.
“While inflation is easing, consumers are still facing high prices compared to two years ago,” King said. “However, they are still willing to purchase brands they know and trust, and this is reflected in our share.”
Hain Celestial trims outlook on SKU rejig
Hain Celestial lowered its full-year organic growth guidance due to ongoing struggles in the US company’s baby-formula segment.
The downgrade to 1%, from a range of 2% to 4% – revealed in its second-quarter results – also comes amid continuing efforts by president and CEO Wendy Davidson to cut “lower margin” SKUs under her Hain Reimagine transformation initiative.
North America sales fell 5.2% to $267.7m compared to the prior year, primarily due to lower sales in baby formula “as a result of continued industry-wide challenges in organic formula supply”. However, despite the decline, the company noted the improvement from the 9.8% drop in the opening quarter.
CFO Lee Boyce said the company is “stepping up investment” in Q3, and that will drive a “sequential improvement in volume”.
John Baumgartner at Japanese investment bank Mizuho Securities wrote in a research note that “the guidance reduction is disappointing as Hain cuts more ‘lower-margin’ stock-keeping units despite years of portfolio rationalisation that investors hoped had turned the corner.”
Hain Celestial also reported second-quarter net loss of $13.5m, turning from a positive $11m in the prior year quarter. Adjusted EBITDA fell to $47.1m from $49.8m, while the margin took a 60 basis-point hit to 10.4%.
BellRing holds double-digit volumes on pricing reversal
The protein business maintained its double-digit volume and sales momentum in the first quarter as the company raised its outlook.
Volumes climbed 19% in the three months to 31 December, building on the fourth quarter’s 19.4% pace, as the Premier Protein shakes and powders brand owner signalled room to capture further market share on low household penetration rates.
The price/mix component turned negative to the tune of 0.3%, compared to a positive 5.2% in the final quarter of fiscal 2023. The metric was 15.4% in the opening quarter of that year, when volumes rose just 2.9%.
Volumes are expected to be supported going forward by price promotions and distribution gains. The Dymatize protein powders and ready-to-drink beverages brand said it was starting to see an element of easing in some ingredients costs.
“Our better-than-expected first-quarter performance, along with strong consumption trends and confidence in our capacity expansion, drove our decision to raise the top- and bottom-line,” president and CEO Darcy Davenport said.
First-quarter sales rose 18.7% to $430.4m, prompting publicly-listed BellRing Brands to raise its full-year outlook to a range of $1.87-$1.95bn, from the $1.83-$1.91bn presented in November.
Baumgartner suggested BellRing Brands’ “momentum” was “intact”.
He wrote: “FQ-1 reinforced our view that more capacity and strong retail demand augurs upside to FY-24 despite hard comps; model shifting to volume-based growth from price-based growth and category volume consumption [are] solid.”
Meat group Westfleisch adds to pet food
Germany’s Westfleisch expanded its pet-food arm with the acquisition of local specialist The Petfood Company.
Westfleisch already does business in dry pet food, selling products under its Dog’s Nature brand in Europe and the US.
The Petfood Company, based in Bocholt, focuses on wet pet-food products and manufactures for private-label clients.
“With this takeover, we have taken a further step towards extending our own value chain,” Westfleisch CEO Dr Wilhelm Uffelmann said. “Given the strong demand from our retail partners, we see high growth potential for The Petfood Company’s premium products.”
Westfleisch COO Johannes Steinhoff said the business chose the private-label manufacturer because it is “a very well-positioned producer in the wet pet-food sector and has a state-of-the-art production facility”.
He added: “With our raw materials, our experience and our network, as well as the targeted realisation of synergies, we will expand production in Bocholt [the location of the plant], develop the production facility sustainably and secure around 60 jobs for the future.”
Gelato d’Italia buys Giuntoli
Gelato d’Italia announced it had bought the assets of local ice lolly maker Gelati Giuntoli from administration.
The Joy-Veg owner purchased the brand, plants and production assets of Tuscany-based Giuntoli.
In a post on LinkedIn, Gelato d’Italia said the “move strengthens our leadership in the Italian market and also makes us the largest player in the water ice category.”
The investor-backed company added: “We are gearing up for more acquisitions in Europe and North America to grow further our capabilities and expand our market reach.”
Giuntoli’s portfolio included brands such as its namesake line and Tutta Natura. Gelato d’Italia is a co-producer and private-label manufacturer that sells in European and North American markets.
In 2022, Davidson Kempner Capital Management, headquartered in New York, and Turkey-based Afendis Capital Management, signed a “definitive agreement” to acquire Gelato d’Italia.
