Wrigley unwraps record first quarter sales
of a 13 per cent sales increase and a 23 per cent increase in
worldwide shipping.
The Chicago-based confectionery giant also reported that net earnings for the quarter were $0.40 per diluted share - including the negative impacts of previously announced restructuring charges ($0.02) and new accounting requirements to expense stock options ($0.02) - versus $0.46 for the year ago period.
"Given the outstanding results of the first half of 2005, the current comparisons are especially challenging, but we remain focused on doing what is best for the long-term vitality of the business," said chairman Bill Wrigley, Jr.
"Overall, given the underlying strength of our core business, we remain on track to deliver on our long-term earnings growth objective of 9 to 11 per cent."
The results reflect the sentiments expressed at the company's annual meeting of shareholders two weeks ago. Then, Wrigley identified a global sales and distribution network that spans more than 180 countries, product differentiation and an acquisition strategy as key to the firm's success.
"As discussed at our annual meeting, we are continuing to integrate the Altoids, Life Savers, Creme Saversand Sugus brands into the Wrigley supply chain - making significant progress to date," he said.
Indeed, the company has made the conscious decision to step up brand support investment behind these acquired confectionery brands to get them on a higher growth trajectory.
"This investment reflects our confidence in the ability of these brands to grow and create value," he added.
"I think you'll agree that the Wrigley company is extremely well positioned for future growth."
Wrigley's core business contributed a solid 6 per cent of the gain while the acquired confectionery brands accounted for 10 per cent of the increase. The negative impact of currency due to translation of results into a relatively stronger US dollar offset that combined growth by 3 per cent.
Asia delivered a very strong 26 per cent increase in sales, driven by volume growth in a wide range of countries and a slight boost from currency translation. In EMEAI (principally Europe) however, sales were down 1 per cent versus year ago, reflecting the negative impact of currency translation that reduced reported results by 6 per cent.
Growth was led by Russia, Ukraine, the Middle East and India, which all recorded strong double-digit gains.
"For our core products, costs have been holding steady as a result of productivity improvements and efficiencies, despite rising commodity and energy prices," said Reuben Gamoran, senior vice president and chief financial officer.
"As is typically the case, new products and packaging formats take some time to reach full profitability and can have a dampening effect on margins, particularly in the short term."
