Multifoods Distribution sales up, earnings down, during 1st half; terrorist attacks not expected to

Net sales for Multifoods Distribution Group, Denver, during the second quarter ended September 1, 2001, climbed 20 percent to $561.6 million. This is as compared with $468.8 million the year prior. The market specialist cited substantial growth in the sandwich and pizza restaurant segments, thanks to several large new customer accounts and growth in existing accounts. Also, sales to independent vending operators increased.

Operating earnings before unusual items dropped percent to $3.6 million, as compared with $3.8 million a year ago. They were impacted by a year-over-year increase in labor rates and utility costs, as well as start-up costs and inefficiencies associated with the significant new business accounts. In vending distribution, Multifoods Distribution experienced competitive pricing pressures and lower industry demand in certain regions because of a weakening economy.

Net sales for the six-month period increased 15 percent to $1.1 billion, as compared with $964.7 million a year ago. Operating earnings before unusual items declined 12 percent to $7.9 million, vs. $9 million a year ago.

Parent company International Multifoods Corp., Minneapolis, reported net earnings of $2.8 million per share for the second quarter, as compared with $5.3 million a year ago. The decline was partially driven by lower operating earnings in both the Multifoods Distribution Group and North America Foods divisions. Both business segments were impacted by start-up costs and inefficiencies associated with several large new customer accounts. In addition, net earnings were affected by costs associated with the consolidation of two condiments processing facilities and the still pending acquisition of assets from Pillsbury and General Mills.

For the current quarter, the impact of the September 11 terrorist attacks on business should take less of a toll on the company than on the industry as a whole, says Gary Costley, International Multifoods ceo. "Our foodservice distribution business serves primarily moderately priced and quick-serve restaurants, which we believe will be less severely impacted in the current environment."


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