Major packaged food and beverage companies are increasing their emphasis on growth through developing markets, according to a US corporate capital expenditures report from Fitch Ratings, via Marketing Daily.
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CPGs, Restaurants Shift Capital Spending Overseas
by Karlene Lukovitz
Major packaged food and beverage companies and restaurant chains alike are shifting more of their capital expenditures overseas, in line with their increasing emphasis on realizing growth through developing markets, confirms a new U.S. corporate capital expenditures report from Fitch Ratings.
Gross capital expenditures for combined food, beverage, restaurant and tobacco companies declined 5.6% between 2008 and 2009 (data excludes Kraft Foods' recent Cadbury acquisition), to $20.2 billion.
The decline primarily reflected the restaurant sector's pullback on new-unit expansion during the recession. Restaurants overall -- and particularly casual dining and highly leveraged chains -- reduced capital spending as they encountered downward pressure on same-store sales, according to Fitch.
Fitch projects that combined expenditures for food and beverage firms, restaurants and tobacco will rise 3.7% to $20.9 billion in 2010 as the economy begins to recover, and 2.7% in 2011.
In the restaurant sector, Fitch's analysts note that while moderate capital expenditures are possible for some operators, a ramp-up in new-unit development is not expected this year.
However, like food and beverage companies, fast-food restaurant chains see substantial growth opportunities in foreign markets. In fact, because of these opportunities, restaurants' capital expenditures as a percentage of sales are higher than CPGs, say the analysts.
For example, Yum Brands is planning a significant capital expenditure increase this year for international expansion, including an ongoing push to "build leading brands across China," Fitch reports.
Yum had nearly 3,500 KFC restaurants in China as of year-end 2009 and grew profits there by 25% last year, despite a slight downturn in same-store sales, according to the corporation's annual report.
In 2008, profits in China rose 28%. According to one epinions.com restaurant reviewer, Yum has modified KFC's menu "quite radically" to suit the tastes of the Chinese. (So attached to KFC are the Chinese, in fact, that protest mobs descended on the restaurants last month after the chain announced that it had canceled a special promotion offer because unauthorized coupons were being presented.)
While capital expenditures for mature packaged goods companies typically remain fairly consistent at 3% to 4% of sales, a few key companies have indicated a need to expand manufacturing capacity or build new facilities, reports Fitch.
These include General Mills, Inc. -- which is increasing its manufacturing capacity expansion in several categories, including yogurt and cereal -- and ConAgra Foods, Inc., which is expanding its sweet potato business by building a new plant, according to the report.
Meanwhile, the retail sector's capital expenditures reflected last year's depressed sales trends. Expenditures among Fitch-rated U.S. retailers declined 12.4%, on top of an even more significant decline of 18.1% in 2008.
Fitch projects modest 2.6% retailer cap-ex growth this year. While retail sales are improving, continuing uncertainty about consumer purchasing behavior is causing retailers to focus on lower-cost store remodeling as opposed to opening/building new units, and lack of new mall construction is also inhibiting some retailer expansion, the rating service reports.
On the upside, the same lack of new construction may be fostering growth among certain types of retailers -- such as dollar stores and other small, in-line mall retailers -- because it has enabled them to procure new sites more readily and at lower costs than in the past, Fitch points out.
Aggregate capital expenditures for the total 308 U.S. corporations tracked/rated by Fitch dropped 16.6% last year, reflecting significant spending cutbacks driven by revenue declines.
Among the top 10 largest capital-spending U.S. corporations, seven slashed these expenditures, most by double-digit percentages. The three that increased spending were Walmart (up 6%), ExxonMobil Corp. (up 16.4%) and Chevron Corp. (up 0.9%).
SOURCE: MediaPost News - Marketing Daily
Thursday, May 6, 2010
BUSINESS NEWS: General Nutrition Centers, Inc. Reports First Quarter 2010 Results
General Nutrition Centers, Inc. Reports First Quarter 2010 Results
PITTSBURGH /PRNewswire/ -- General Nutrition Centers, Inc. ("GNC" or the "Company"), a leading global specialty retailer of nutritional products, today reported its financial results for the quarter ended March 31, 2010.
For the first quarter of 2010, the Company reported net income of $26.0 million, a $6.5 million, or 33.5%, increase over net income of $19.4 million for the first quarter of 2009. Net income as a percentage of revenue was 5.6% in the first quarter of 2010, compared to 4.4% in the first quarter of 2009.
For the first quarter of 2010, the Company reported consolidated revenue of $465.0 million, an increase of 5.7% over consolidated revenue of $439.9 million for the first quarter of 2009. Revenue increased in the Company's retail and franchise segments by 5.1% and 12.6%, respectively, and declined in the manufacturing/wholesale segment by 0.3%. Same store sales improved 3.1% in domestic Company-owned stores representing the 19th consecutive quarter of positive same store sales.
Earnings before interest, income taxes, depreciation, amortization and non-cash stock-based compensation ("Adjusted EBITDA") for the first quarter of 2010 was $70.3 million, an $8.0 million, or 12.8%, increase over the Adjusted EBITDA of $62.3 million for the first quarter of 2009. Adjusted EBITDA was 15.1% as a percentage of revenue in the first quarter of 2010, compared to 14.2% in the first quarter of 2009.
For the first quarter of 2010, the Company generated net cash from operations of $72.1 million, incurred capital expenditures of approximately $7.3 million, and paid approximately $0.6 million in principal on outstanding debt. Additionally during the quarter, the Company declared and paid a dividend of $28.4 million to GNC Corporation, its direct parent. At March 31, 2010, the Company's cash balance was $110.6 million.
In the first quarter of 2010, the Company opened 9 net new domestic Company-owned stores, 3 net new Company-owned stores in Canada, 31 net new international franchise locations, and 54 net new franchise store-within-a-store Rite Aid locations, and closed 8 net domestic franchise locations.
In the first quarter of 2010, the Company announced an alliance with The Gatorade Company, a division of PepsiCo, to launch G Series Pro – a new sports drink variant of Gatorade's recently launched G Series that until now has only been available in professional sports locker rooms and specialized training facilities. Through this alliance, G Series Pro will be distributed initially through an exclusive co-marketing and co-distribution collaboration with the Company and its network of more than 3,500 company-owned and franchised GNC stores across the country.
Joe Fortunato, Chief Executive Officer, said, "Our first quarter results represent a good start to 2010, as we continue to grow revenue, profit, Adjusted EBITDA margin, and cash flow. We also continue to make progress on our major strategic initiatives. The recently announced collaboration with Gatorade is a good example of our exciting new brand extension efforts. We are confident that our relentless focus on science and product innovation will continue to generate opportunities to build brand awareness and strengthen GNC's leading position in the health and wellness industry."
SOURCE: CNW Newswire Press Release
PITTSBURGH /PRNewswire/ -- General Nutrition Centers, Inc. ("GNC" or the "Company"), a leading global specialty retailer of nutritional products, today reported its financial results for the quarter ended March 31, 2010.
For the first quarter of 2010, the Company reported net income of $26.0 million, a $6.5 million, or 33.5%, increase over net income of $19.4 million for the first quarter of 2009. Net income as a percentage of revenue was 5.6% in the first quarter of 2010, compared to 4.4% in the first quarter of 2009.
For the first quarter of 2010, the Company reported consolidated revenue of $465.0 million, an increase of 5.7% over consolidated revenue of $439.9 million for the first quarter of 2009. Revenue increased in the Company's retail and franchise segments by 5.1% and 12.6%, respectively, and declined in the manufacturing/wholesale segment by 0.3%. Same store sales improved 3.1% in domestic Company-owned stores representing the 19th consecutive quarter of positive same store sales.
Earnings before interest, income taxes, depreciation, amortization and non-cash stock-based compensation ("Adjusted EBITDA") for the first quarter of 2010 was $70.3 million, an $8.0 million, or 12.8%, increase over the Adjusted EBITDA of $62.3 million for the first quarter of 2009. Adjusted EBITDA was 15.1% as a percentage of revenue in the first quarter of 2010, compared to 14.2% in the first quarter of 2009.
For the first quarter of 2010, the Company generated net cash from operations of $72.1 million, incurred capital expenditures of approximately $7.3 million, and paid approximately $0.6 million in principal on outstanding debt. Additionally during the quarter, the Company declared and paid a dividend of $28.4 million to GNC Corporation, its direct parent. At March 31, 2010, the Company's cash balance was $110.6 million.
In the first quarter of 2010, the Company opened 9 net new domestic Company-owned stores, 3 net new Company-owned stores in Canada, 31 net new international franchise locations, and 54 net new franchise store-within-a-store Rite Aid locations, and closed 8 net domestic franchise locations.
In the first quarter of 2010, the Company announced an alliance with The Gatorade Company, a division of PepsiCo, to launch G Series Pro – a new sports drink variant of Gatorade's recently launched G Series that until now has only been available in professional sports locker rooms and specialized training facilities. Through this alliance, G Series Pro will be distributed initially through an exclusive co-marketing and co-distribution collaboration with the Company and its network of more than 3,500 company-owned and franchised GNC stores across the country.
Joe Fortunato, Chief Executive Officer, said, "Our first quarter results represent a good start to 2010, as we continue to grow revenue, profit, Adjusted EBITDA margin, and cash flow. We also continue to make progress on our major strategic initiatives. The recently announced collaboration with Gatorade is a good example of our exciting new brand extension efforts. We are confident that our relentless focus on science and product innovation will continue to generate opportunities to build brand awareness and strengthen GNC's leading position in the health and wellness industry."
SOURCE: CNW Newswire Press Release
Wednesday, May 5, 2010
EXECUTIVE SUITE - Exclusive Newsletter Feature
Coming soon - a brand new feature to the ihr newsletter!
Sheldon Baker, of the Baker Dillon Group, will be contributing a weekly column entitled Executive Suite, in which he will interview top management in the natural products industry, including managers, directors, VPs, Presidents/CEOs and Founders across the natural supplement, food and cosmetic works industries.
Do you have questions you'd like to ask? Is there someone you'd like to see featured in Executive Suite? Let us know.
Watch for Executive Suite, coming soon!
Sheldon Baker, of the Baker Dillon Group, will be contributing a weekly column entitled Executive Suite, in which he will interview top management in the natural products industry, including managers, directors, VPs, Presidents/CEOs and Founders across the natural supplement, food and cosmetic works industries.
Do you have questions you'd like to ask? Is there someone you'd like to see featured in Executive Suite? Let us know.
Watch for Executive Suite, coming soon!
INDUSTRY NEWS: derma e Earns Best Green Face Wash Award
SIMI VALLEY, Calif.–Healing Lifestyles & Spas rewarded derma e® Natural Bodycare with a 2010 Earth Day Beauty Award for Best Green Face Wash. The news was announced on healinglifestyles.com.
Healing Lifestyles & Spas awarded one of derma e's facial cleansing gels, which utilizes tropical tamanu oil; green tea; pomegranate; papaya; and vitamins A, C and E to cleanse away dirt, oil and impurities. “Simple, effective and a smell reminiscent of paradise, this face wash is proof that derma e® can create high-quality skincare without a hefty price tag,” said Elizabeth Marglin of Healing Lifestyles & Spas, April 2010.
All derma e® products have a safe, effective delivery system that is free of parabens, phthalates, petrolatum, mineral oil, lanolin, sodium lauryl sulfates, and artificial colors. They are vegetarian, cruelty-free, non-comedogenic, GMO-free and manufactured with 100-percent wind energy. Additionally, a percentage of all product sales are donated to The Paraguay Project.
“derma e® is committed to developing and producing the highest quality formulations that nourish and care for the entire body and the environment. We are extremely pleased that the media has recognized this,” said Dr. Linda Miles, L. Ac. D.O.M., Vice President of derma e® Natural Bodycare.
SOURCE: Natural Products Marketplace, Healinglifestyles.com
Healing Lifestyles & Spas awarded one of derma e's facial cleansing gels, which utilizes tropical tamanu oil; green tea; pomegranate; papaya; and vitamins A, C and E to cleanse away dirt, oil and impurities. “Simple, effective and a smell reminiscent of paradise, this face wash is proof that derma e® can create high-quality skincare without a hefty price tag,” said Elizabeth Marglin of Healing Lifestyles & Spas, April 2010.
All derma e® products have a safe, effective delivery system that is free of parabens, phthalates, petrolatum, mineral oil, lanolin, sodium lauryl sulfates, and artificial colors. They are vegetarian, cruelty-free, non-comedogenic, GMO-free and manufactured with 100-percent wind energy. Additionally, a percentage of all product sales are donated to The Paraguay Project.
“derma e® is committed to developing and producing the highest quality formulations that nourish and care for the entire body and the environment. We are extremely pleased that the media has recognized this,” said Dr. Linda Miles, L. Ac. D.O.M., Vice President of derma e® Natural Bodycare.
SOURCE: Natural Products Marketplace, Healinglifestyles.com
BUSINESS NEWS: Sun-Rype reports First Quarter 2010 Results
Sun-Rype reports Q1 2010 financial results
KELOWNA, BC, May 5 /CNW/ - Sun-Rype Products Ltd. (TSX:SRF) today released its financial results for the quarter ended March 27, 2010.
Financial Highlights
Sun-Rype's net sales in the first quarter of 2010 were $34.5 million compared to $41.0 million in the first quarter of 2009. The Company's net income the first quarter of 2010 was $0.3 million or $0.02 per share, compared to net income of $2.8 million or $0.26 per share in the first quarter of 2009.
"Lower sales of both beverage and food products in the first quarter of 2010 compared to record sales in the first quarter of 2009, combined with increased investment in marketing contributed to lower earnings in 2010 compared to the same period in 2009", says Dave McAnerney, President & CEO.
Sun-Rype Products Ltd., based in Kelowna, BC, is a manufacturer and marketer of 100% juices and 100% fruit snacks under the Sun-Rype brand. Sun-Rype is a publicly traded Canadian company with its common shares listed on the Toronto Stock Exchange under the symbol SRF.
SOURCE: CNW Newswire Press Release
KELOWNA, BC, May 5 /CNW/ - Sun-Rype Products Ltd. (TSX:SRF) today released its financial results for the quarter ended March 27, 2010.
Financial Highlights
Sun-Rype's net sales in the first quarter of 2010 were $34.5 million compared to $41.0 million in the first quarter of 2009. The Company's net income the first quarter of 2010 was $0.3 million or $0.02 per share, compared to net income of $2.8 million or $0.26 per share in the first quarter of 2009.
"Lower sales of both beverage and food products in the first quarter of 2010 compared to record sales in the first quarter of 2009, combined with increased investment in marketing contributed to lower earnings in 2010 compared to the same period in 2009", says Dave McAnerney, President & CEO.
Sun-Rype Products Ltd., based in Kelowna, BC, is a manufacturer and marketer of 100% juices and 100% fruit snacks under the Sun-Rype brand. Sun-Rype is a publicly traded Canadian company with its common shares listed on the Toronto Stock Exchange under the symbol SRF.
SOURCE: CNW Newswire Press Release
INDUSTRY NEWS: Lead and drugs found in herbal supplements, says Health Canada
Lead and drugs found in herbal supplements, says Health Canada
Health Canada is warning consumers off Chinese herbal supplements found to contain a range of contaminants by the Hong Kong Department of Health.
Three of the supplements are marketed as erectile dysfunction supplements. Man Power was found to contain the pharmaceutical, tadalafil; Lin Yan Yin Chiao was found to contain chlorpheniramine and paracetamol and Bao Shu Tang Wu Zi Yan Zong Wan was found to contain excessive levels of lead.
Health Canada said none of the products are authorized for sale in Canada but could have been purchased via the internet or brought into the country by travellers.
The other was a weight loss product called Slim-30 that was adulterated with sibutramine and which its maker, Duxx Enterprises Inc, has voluntarily withdrawn.
Last week the Hong Kong Department of Health issued a public warning against a weight loss product called LAMI that was found to contain sibutramine and spironolactone.
SOURCE: Health Canada, NutraIngredients-USA
The press release from the Hong Kong Department of Health is as follows:
Slimming product with undeclared drug ingredients
The Department of Health (DH) today (April 30) called on members of the public not to buy or use a slimming product "LAMI" as it was found to contain undeclared western drug ingredients that may cause serious side effects.
The appeal followed investigations by DH into a report by the Hospital Authority concerning a woman feeling unwell reported after taking the product. Laboratory tests on the product sample showed the presence of sibutramine and spironolactone.
The 28-year-old woman developed psychiatric symptoms including auditory and visual hallucination, paranoid ideas, and low mood since April 21 after taking the product.
She was hospitalised in Kwong Wah Hospital on April 23 and discharged in stable condition on April 26.
Investigation revealed that she had bought the slimming product from a shop in Lok Fu.
Investigations by DH are continuing.
A caution against a similar product was made on June 4, 2008.
Sibutramine is a western drug ingredient used as appetite suppressant for slimming and is under close medical supervision. Its side effects include increased blood pressure and heart rate, symptoms of psychosis and possibly convulsion. People with heart problems should not take it.
Spironolactone is a drug used for reducing the amount of water in the body and is used to treat oedema and heart failure. It can cause headache, drowsiness and gastro-intestinal disturbances.
Products containing sibutramine or spironolactone must be registered before they can be sold in Hong Kong. They are classified as prescription-only medicine and can only be sold on a doctor's prescription and dispensed under the supervision of a pharmacist, A DH spokesman said.
He said: "Sale of unregistered pharmaceutical products is an offence under the Pharmacy and Poisons Ordinance. The maximum penalty is a fine of $100,000 and two years' imprisonment."
"People should stop using the product immediately. They should consult a doctor if they feel unwell after taking the product."
The spokesman urged people who had used the product to stop taking it immediately and seek advice from healthcare professionals if they felt unwell.
People should submit the products to the department's Pharmaceutical Service at 3/F, Public Health Laboratory Centre, 382 Nam Cheong Street, Kowloon, during office hours, or destroy them before disposal.
"Weight control should be achieved through good diet and appropriate exercise. People should consult healthcare professionals before using any medication for weight control," the spokesman said.
SOURCE: Hong Kong Department of Health
Health Canada is warning consumers off Chinese herbal supplements found to contain a range of contaminants by the Hong Kong Department of Health.
Three of the supplements are marketed as erectile dysfunction supplements. Man Power was found to contain the pharmaceutical, tadalafil; Lin Yan Yin Chiao was found to contain chlorpheniramine and paracetamol and Bao Shu Tang Wu Zi Yan Zong Wan was found to contain excessive levels of lead.
Health Canada said none of the products are authorized for sale in Canada but could have been purchased via the internet or brought into the country by travellers.
The other was a weight loss product called Slim-30 that was adulterated with sibutramine and which its maker, Duxx Enterprises Inc, has voluntarily withdrawn.
Last week the Hong Kong Department of Health issued a public warning against a weight loss product called LAMI that was found to contain sibutramine and spironolactone.
SOURCE: Health Canada, NutraIngredients-USA
The press release from the Hong Kong Department of Health is as follows:
Slimming product with undeclared drug ingredients
The Department of Health (DH) today (April 30) called on members of the public not to buy or use a slimming product "LAMI" as it was found to contain undeclared western drug ingredients that may cause serious side effects.
The appeal followed investigations by DH into a report by the Hospital Authority concerning a woman feeling unwell reported after taking the product. Laboratory tests on the product sample showed the presence of sibutramine and spironolactone.
The 28-year-old woman developed psychiatric symptoms including auditory and visual hallucination, paranoid ideas, and low mood since April 21 after taking the product.
She was hospitalised in Kwong Wah Hospital on April 23 and discharged in stable condition on April 26.
Investigation revealed that she had bought the slimming product from a shop in Lok Fu.
Investigations by DH are continuing.
A caution against a similar product was made on June 4, 2008.
Sibutramine is a western drug ingredient used as appetite suppressant for slimming and is under close medical supervision. Its side effects include increased blood pressure and heart rate, symptoms of psychosis and possibly convulsion. People with heart problems should not take it.
Spironolactone is a drug used for reducing the amount of water in the body and is used to treat oedema and heart failure. It can cause headache, drowsiness and gastro-intestinal disturbances.
Products containing sibutramine or spironolactone must be registered before they can be sold in Hong Kong. They are classified as prescription-only medicine and can only be sold on a doctor's prescription and dispensed under the supervision of a pharmacist, A DH spokesman said.
He said: "Sale of unregistered pharmaceutical products is an offence under the Pharmacy and Poisons Ordinance. The maximum penalty is a fine of $100,000 and two years' imprisonment."
"People should stop using the product immediately. They should consult a doctor if they feel unwell after taking the product."
The spokesman urged people who had used the product to stop taking it immediately and seek advice from healthcare professionals if they felt unwell.
People should submit the products to the department's Pharmaceutical Service at 3/F, Public Health Laboratory Centre, 382 Nam Cheong Street, Kowloon, during office hours, or destroy them before disposal.
"Weight control should be achieved through good diet and appropriate exercise. People should consult healthcare professionals before using any medication for weight control," the spokesman said.
SOURCE: Hong Kong Department of Health
Tuesday, May 4, 2010
EXECUTIVE SUITE - Exclusive Newsletter Feature
Coming soon - a brand new feature to the ihr newsletter!
Sheldon Baker, of the Baker Dillon Group, will be contributing a weekly column entitled Executive Suite, in which he will interview top management in the natural products industry, including managers, directors, VPs, Presidents/CEOs and Founders across the natural supplement, food and cosmetic works industries.
Do you have questions you'd like to ask? Is there someone you'd like to see featured in Executive Suite? Let us know.
Watch for Executive Suite, coming soon!
Sheldon Baker, of the Baker Dillon Group, will be contributing a weekly column entitled Executive Suite, in which he will interview top management in the natural products industry, including managers, directors, VPs, Presidents/CEOs and Founders across the natural supplement, food and cosmetic works industries.
Do you have questions you'd like to ask? Is there someone you'd like to see featured in Executive Suite? Let us know.
Watch for Executive Suite, coming soon!
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