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Flowers Foods CEO applauds ‘amazing’ work in the wake of Hostess disruption

By Kacey Culliney , 08-Feb-2013
Last updated on 08-Feb-2013 at 13:05 GMT

Flower Foods team members and its distribution partners did an amazing job of serving customers in the wake of market disruption when Hostess liquidated, Flowers CEO said.

George Deese, chairman and CEO of Flowers Foods, was speaking on a conference call for the bakery giant’s fourth quarter and full year 2012 earnings yesterday.

Deese said that teams worked through nights to up production and supply for customers left in the lurch as Hostess exited the market just ahead of Thanksgiving.

“One of our on-going strategies is to provide exceptional customer service and I’m so proud of their efforts – in sales, manufacturing, distribution, accounting and all other departments,” he said.

Deese said that these efforts did benefit sales and earnings in Q4.

Solid results in Q4 and full 2012 given ‘interesting times’

Alluding to an ‘eventful’ and ‘interesting’ year, the CEO welcomed a solid set of results.

Sales for the fourth quarter (Q4) were pegged at $749.4m, up 14.7% from the previous year. Net profit was $38.6m compared to $23m in Q4 2011.

Along with efforts to rally business in the wake of the Hostess exit, Flowers said that solid sales could be attributed to volume increases of 10.3% and the Lepage Bakeries acquisition – contributing 6.4% to sales.

On the topic of increased volumes, president of Flowers Foods Allen Shiver said that the firm had improved productivity across all bakeries and lines. It was this, he said, that had ensured the increased volumes without upping capacity.

“As we continue to enter new markets and introduce new products and brands, we will need more production capacity. Our strategies for managing growth have been successful in the past and we expect them to continue to guide our future,” Shiver said.

For the full fiscal year 2012, Flowers pulled in sales of $3.05bn, up 9.8% from 2011. The Tasty Baking and Lepage Bakeries acquisitions contributed 6.2% of sales, Flowers said.

Net profit for the year was $136.1m, up from $123.4m for fiscal 2011 and EBIDTA (Earnings before interest, taxes, depreciation and amortization) for the year was $321.2m.

Legal proceedings remain underway

Keeping quiet on Hostess and Sara Lee/Earthgrains

Deese made clear that Flowers would not comment or speculate on either its Hostess bid before the auction on February 28 or the pending Sara Lee/Earthgrains licensing deal – set to be finalized on February 13, subject to court approval.

“These matters are in the legal process and so for these reasons and also competitive reasons, we will not be able to discuss everything today,” the CEO said in yesterday’s conference call.

Deese said that should the Sara Lee/Earthgrains deal go ahead, Flowers would then have access to 77% of the US population. This is significantly ahead of its initial aim of making its bread products available to 75% of the population by 2016, he noted.

Shiver added that teams are ready to go live when the transaction is completed following a tremendous amount of work to reorganize its distribution system, add team members and coordinate plans with trade customers.

Given the on-going transactions and bids, Flowers has delayed guidance on 2013 but Deese said that the year should meet or exceed long-term goals.

“We are confident in our strategies and in our team as we manage through changes underway in our industry. But make no mistake; this continues to be a competitive category. We’re constantly on watch to keep our products and brands relevant and our service high as we meet the needs of our customers and deliver good value for consumers,” the CEO concluded.

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