L’OR EspressO continues to perform well in France and initial results from the Netherlands, Spain and Belgium are promising and reaffirm the growth potential of this product. L’OR EspressO capsules are now sold through more than 15,000 retail stores in Europe. In Brazil, Senseo was successfully launched in Rio de Janeiro following the promising results of the initial introduction of Senseo in São Paulo. The integration of Brazilian Damasco is ahead of plan, with better than expected synergies and growth. Australia successfully launched two new products, Piazza D’Oro and Moccona Café Classics Frappé, which helped to reach a record-high value share of 67 percent in the freeze-dried instant coffee segment. In Foodservice, the trend in machine placements picked up in the quarter and the recent successful roll-out of Cafitesse Excellence contributed to the positive momentum.
The international beverage business is making good progress in aligning its organizational structure with its future growth ambitions. As part of this process, the marketing and R&D functions are being redesigned to optimize the innovation process and allow for a faster product to market process.
Adjusted operating segment income decreased 13 percent to $121 million resulting in an adjusted operating margin of 12.4 percent which largely reflects the time lagging effect between commodity cost increases and subsequent price increase. MAP spending in the fourth quarter was below the significant investment in the prior-year period which in large part is attributable to last year’s launch of L'OR EspressO in France. On a full year basis, MAP investment was up 3 percent providing adequate support to the coffee and tea brands. Reported operating segment income declined 4 percent to $119 million.
Adjusted net sales for international bakery declined 8 percent to $182 million mainly due to difficult macro-economic and competitive conditions in Spain. Reported net sales declined 1 percent to $182 million.
Adjusted operating segment income was $13 million lower than the prior year while reported operating segment income declined $10 million. In Spain, further price reductions were required to maintain market share, which led to additional short-term margin pressure. Restructuring activities to transform the company’s sales force to independent operators are progressing as planned.
In the fourth quarter corporate expenses, excluding significant items, were $33 million lower than the prior-year period. For the full year, corporate expenses, excluding significant items, declined $94 million primarily attributable to the impact of headcount reductions, lower employee benefits costs, the sale of the company plane and a reduction in franchise taxes