US food group Hain Celestial has announced a 5% boost to full-year UK sales, driven by a strong performance of its Tilda and Ella’s Kitchen brands.
Net UK sales in the year to 30 June 2018 were up 10% on a reported basis to $938m, which translated to 5% growth after adjusting for foreign exchange movements, M&A activity and other items.
The overall sales growth was driven by a 14% increase in Tilda sales, 9% growth from Hain Daniels and 14% growth from Ella’s Kitchen.
These growth figures on an organic basis were 8% for Tilda, 3% for Hain Daniels and 7% for Ella’s Kitchen.
Operating income for the UK in the year was $56m, an 8% increase from the prior year, and adjusted operating income was $70.3m, an increase of 24% over the prior year driven by strong contribution from the Hain Daniels brands.
Fourth quarter UK sales were up 10% to $239.1m or 5% on an organic basis.
Overall group-wide net sales increased 5% to $2.46bn compared to the prior year, or 2% on a constant currency basis.
Growth was primarily driven by “low to mid double-digit” net sales increases from the United Kingdom and Rest of World reporting segments, partially offset by a low single digit net sales decrease from the United States.
Hain Celestial United States net sales in fiscal year 2018 decreased 2% over the prior year to $1.1bn and down 1% on a like-for-like basis.
When adjusted for FX and M&A including the 2017 and 2018 “Project Terra SKU rationalization”, overall net sales would have increased 2% compared to the prior year.
Gross margin of 21.0% was a 120 basis point decrease over the prior year. Adjusted gross margin was 40bp down to 22.1% as a result of higher trade and promotional investments in Hain Celestial United States, increased freight and commodity costs and unfavourable price/volume mix.
Operating income of $106m represented a $3.4m decrease over the prior year.
Chief executive Irwin Simon commented: “We continued to execute on our global strategic objectives, with marketing investments in our core brands and incremental savings and productivity through Project Terra, although a number of cost and operational headwinds in the United States impacted our consolidated annual results.”
“Our top priorities in fiscal year 2019 are to return our United States business to growth and to generate increased profitability. We remain optimistic that the aggressive strategic changes and investments in our go-to-market strategy will fuel our future results and value for our stockholders.”
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