Milling & Baking News - August 14, 2018 - 15

Financial Results

J&J Snack profits up; food service
baked foods sales rise 4%
PENNSAUKEN, N.J. - Net income
at J&J Snack Foods in the third quarter ended June 30 totaled $26,129,000,
equal to $1.40 per share on the common
stock, up 3% from $25,304,000, or $1.35
per share, in the third quarter of fiscal
2017. Net sales were $306,239,000, up
3.7% from $295,415,000.
Overall, total food service operating
income at J&J Snack Foods decreased
11% in the third quarter to $19,663,000
from $22,005,000 in the same period a
year ago. Sales, meanwhile, increased
almost 5% to $191,701,000. Within the
food service division, sales of bakery products totaled $93,082,000, up
4% from the same period a year ago,
while soft pretzel sales increased 20%
to $53,880,000, and churros decreased
5% to $16,739,000.
"Sales of our food service products
were not as strong this quarter, although we continued to have strong
sales growth of soft pretzels in restaurants and movie theaters and through
our customer base," Gerald B. Shreiber,
chairman, president and chief executive
officer, said during a July 31 conference

call with analysts. "Sales of our new
Brauhaus pretzels have been very encouraging. Bakery sales were up modestly this quarter. Handheld sales were
up a strong 16% for the quarter as we
have had strong increases to a few customers, existing and new.
"Churros sales were down 5% because sales of churros to a particular
warehouse club store in last year's
quarter were discontinued. Frozen
juice bar and ices sales were down
21% because of a loss of a promotion
and distribution in warehouse club
stores. Although funnel cake sales
were down this quarter due to lower
sales to restaurant chains, sales to
schools continue to grow. They were
up 40% this year.
"Overall sales to restaurant chains
have been strong this year, while sales
to schools have been down modestly."
In the retail supermarket segment,
operating income totaled $3,203,000,
down 35% from $4,890,000 a year ago.
Total sales in the retail supermarket
segment were $38,532,000, nearly unchanged from $38,142,000 in the same

Currency effects, algae business
drag down Corbion earnings
AMSTERDAM, THE NETHERLANDS
- Negative currency effects and the inclusion of an algae ingredients business
were factors as both sales and EBITDA,
excluding one-off items, declined in the
first half of the year for Corbion nv.
EBITDA, excluding one-off items, was
€71.5 million ($82.7 million), down 19%
from €88.3 million in the same time of
the previous year. Organic EBITDA, excluding one-off items, increased by 1.2%.
Net sales dropped 4.9% to €439.2 million ($508.1 million) from €461.9 million. Organic sales growth was 3.1%,
but currency effects were a minus 8.7%.
Acquisitions had a positive sales effect
of 0.7%. The sales growth from acquisitions stemmed from the 2017 takeover
of most of the assets of TerraVia, an algae ingredients company and the purchase earlier this year of the remaining
49.9% interest in the SB Renewable Oils
joint venture from Bunge.
"As expected, our profitability in
Innovation Platforms is adversely impacted by the inclusion of the newly
acquired algae ingredients business,
bakingbusiness.com / world-grain.com

which is in an early stage of development," said Tjerk de Ruiter, chief executive officer of Amsterdam-based
Corbion, when first-half results were
reported Aug. 8. "We believe that this
platform offers many exciting growth
opportunities for Corbion, leveraging
our expertise of running industrial
scale organic acid operations."
While first-half sales in the Innovation Platforms grew 81% to €21.7 million, losses before interest, taxes, depreciation and amortization, excluding one-off-items, was €13.3 million,
which compared to losses of €2.9 million in the previous year's first half.
After Corbion acquired the remaining interest in the SB Renewable Oils
joint venture in June, the associated
sales and losses before interest, taxes,
depreciation and amortization of the
plant were included in the Innovation
Platforms from June.
In Corbion's Ingredient Solutions,
sales were down 7% to €417.5 million
even though organic sales growth was
1.6%. EBITDA, excluding one-off items,

period a year ago. Within the retail
supermarket division, sales of soft
pretzels decreased 2% to $7,332,000,
frozen juices and ices increased 5% to
$28,785,000, and handhelds fell 17% to
$2,960,000.
"Soft pretzel sales in our retail supermarket were down 2% for the quarter,
primarily because of increased trade
spending," Mr. Shreiber said. "Frozen
novelty sales were strong as we rolled
out a line of a licensed product, Sour
Patch Kids Ice Pops. We are focused
on reducing trade spending going forward. Sales in our Icee frozen beverage segment were up a modest 2% for
the quarter."
Robert J. Pape, senior vice-president
of sales at J&J Snack, said the company
still has a lot of room to grow on the
innovation front. Additionally, he said
the company sees growth potential in
certain retail channels.
"On the food service side, our chain
restaurant business and our national
account certainly are areas where we
still feel there is a huge amount of
potential," Mr. Pape said. "And then
along the lines of our health care accounts, our convenience store channels, those are all areas where we feel
that we have ample opportunity moving forward." MBN
was €84.8 million, down 7%.
Within Ingredient Solutions, Food sales were down
nearly 10% to €304.5 million.
Food sales on an organic
basis were flat compared to
the first half of 2017. EBITDA, excluding
one-off items, in Food was €54.7 million,
down 15%.
Within Food, Bakery sales declined
because of last year's challenges in executing the Bakery channel strategy and
losses in frozen dough, but the decline
was less pronounced in the second
quarter compared to the first quarter.
"I am happy to report that we have
seen a continuation of improving organic sales growth rates in our Food
business segment, which returned to
growth in Q2 after a challenging period," Mr. de Ruiter said. "In the first
half of the year, Corbion performed
within the sales growth rate target
bandwidth of our creating sustainable
growth strategy."
In the second half of the year, Corbion companywide expects organic
sales growth to be higher, mainly
due to the recovery of the Bakery
business. EBITDA margin is expected to be lower. MBN
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August 14, 2018 / 15

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Milling & Baking News - August 14, 2018

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