Weak Snapple and Oatmeal Sales Hurt Quaker Earnings
CHICAGO (AP) _ Quaker Oats Co., reshaped by its acquisition of the Snapple beverage brand and the sale of its pet food business, reported lower earnings from continuing operations Wednesday.
Beneath a clutter of one-time gains and charges, Quaker Oats reported earnings from continuing operations of 15 cents per share, down from 65 cents a year earlier.
The company had predicted the results last month in a statement alerting financial analysts to disappointing sales of Snapple, which Quaker Oats acquired in November.
``It’s not good news, but it’s not new news,″ said John McMillin, a food industry analyst at Prudential Securities Inc.
William D. Smithburg, Quaker Oats chairman and chief executive, said the company was working to improve sales of Snapple and its hot cereals. Snapple unit sales were 17 percent lower in the first half of this year than last year, he said.
``Building Snapple for the long term and making it profitable for the calendar 1996 season is our number one priority,″ Smithburg said in a statement.
Chicago-based Quaker Oats had net income of $344.2 million, or $2.57 per share, for the three months ended June 30, the last quarter of its fiscal year, compared with $23.5 million, or 17 cents per share, a year earlier.
The 1995 results included a pretax gain of $652.9 million, or $2.77 per share; a restructuring charge of $76.5 million, or 35 cents per share; and a pretax charge of $10.6 million, or 5 cents per share, for potential costs of a trademark infringement lawsuit over a Gatorade ``Thirst Aid″ slogan.
Sales fell 2 percent to $1.59 billion from $1.62 billion, reflecting divestment of the pet food, beans and chili, Mexican chocolate and Dutch honey businesses.
For the 1995 fiscal year, Quaker reported net income of $802 million, or $5.97 per share, compared with $231.5 million, or $1.68 per share, in fiscal 1994.
The 1995 results included pretax gains of $1.17 billion, or $5.20 per share, from divestments; a pretax restructuring charge of $76.5 million, or 35 cents per share; and a legal reserve of $29 million, or 13 cents per share, for the trademark lawsuit. Also included was a $6.8 million pretax gain from an accounting change.
The 1994 results included a pretax gain of $9.8 million, or 7 cents per share, from a divestiture; and a pretax restructuring charge of $118.4 million, or 55 cents per share.
The year-ago per-share earnings were adjusted for a two-for-one stock split.
Quaker’s 1995 sales rose 7 percent to $6.37 billion from $5.95 billion.
On the New York Stock Exchange, Quaker Oats stock ended unchanged at $34.50 Wednesday.