Dr Pepper Snapple Group, Inc. Responds To Texas Bottler
The sale of the North American Fresh Bakery to Grupo Bimbo is expected to close before the end of September.
Sara Lee decided in August to divest the Spanish bakery and French refrigerated dough businesses. For both, a sales process is underway and numerous bids have been received. These businesses will be reclassified to discontinued operations in the first quarter of fiscal 2012. The Australian frozen desserts business remains under strategic review.
The North American Retail segment reported a 4 percent increase in adjusted net sales to $715 million, primarily driven by pricing actions. The segment reported strong new product performance with growth from Jimmy Dean Jimmy D's and Hearty Crumbles, and Hillshire Farm Low Sodium and Family Size. Ball Park maintained its share leadership behind the successful introduction of New York Deli Style Beef Franks. These launches were more than offset by the negative volume impact from early pricing actions taken to offset commodity cost increases and the rationalization of lower margin promotional programs. Mix was marginally positive. On a reported basis, net sales declined 2 percent largely due to last year’s 53rd week.
Adjusted operating margins improved by 590 basis points over the prior year’s fourth quarter, increasing to 11.4 percent. Reported operating margin for the quarter was 10.1 percent. For the second straight quarter, commodity cost increases were recovered through cost savings initiatives and pricing actions. The net commodity recovery along with lower MAP spending (versus significant investment in the fourth quarter of last year) and a reduction in SG&A expense drove an adjusted operating segment income increase of $44 million versus last year. Reported operating segment income increased $32 million. The implementation of SAP across all meat plants is now complete and is expected to generate efficiencies and cost savings in fiscal 2012.
In the North American Foodservice segment, adjusted net sales increased 9 percent to $400 million, driven largely by pricing actions taken across the portfolio. This marks the second straight quarter of strong top-line growth in the segment. Reported net sales grew by 2.1 percent. Segment volumes were down as declines in roast and ground coffee and diversified bakery more than offset volume growth in meats, frozen bakery and liquid coffee. The segment posted particularly strong results for Jimmy Dean breakfast sausages, pre-sliced pies and cakes and branded meats distributed through convenience stores.
Adjusted operating segment income increased 37 percent driven by cost savings and strong business performance in meats, frozen bakery and liquid coffee. Adjusted operating margin expanded 100 basis points over the prior year to 5.0 percent driven by manufacturing efficiencies and favorable sales mix. This growth was achieved despite the loss of the low-volume, high-margin liquid coffee contract during last year’s fourth quarter. Reported operating segment income declined $6 million due to impairment charges and spin off related costs while the reported operating margin decreased 150 basis points to 0.1 percent.
Adjusted net sales of the international beverage segment increased 14 percent to $978 million in the fourth quarter. The increase was driven by pricing and sales mix of 17 percent and higher green coffee export sales from Brazil, partially offset by volume softness. The volume decline mainly reflects the multiple price increases that were put through in the majority of markets to offset commodity price increases. Price increases and cost savings are expected to have fully offset commodity price increases by the second quarter of fiscal 2012. Volumes were also impacted by a slight decline in the overall coffee market in the Netherlands and a deliberate choice to end private label production in France. Reported net sales increased 24 percent to $996 million.
