(Adds details, analyst’s comments, share movement)
By Swagata Gupta
BANGALORE, May 22 (Reuters) - Bakery company Flowers Foods Inc (FLO.N) posted a better-than-expected quarterly profit as higher pricing helped offset a rise in input costs, and also raised its 2008 outlook, sending its shares up about 12 percent to a lifetime-high.
“The company had exceptional sales performance in their branded products and a strong cost control which led to a terrific first quarter,” Janney Montgomery Scott analyst Mitchell Pinheiro said.
Branded retail sales were up 13.8 percent in the quarter ended April 19, driven by the company’s Nature’s Own breads and its regional white bread brands.
Selling, marketing, and administrative costs as a percent of sales were 37.2 percent compared to 39.0 percent a year ago, the company said.
“Our performance in the first quarter was strong in the face of cost pressures and the uncertainty of consumer behavior as energy and food costs rose,” Chief Executive George Deese said in a statement.
The second quarter will witness the steepest increase in commodity costs for the year, Deese added. “In the short term, we will experience greater pressure due to those high costs.”
However, he believes the company, which produces, markets, and distributes breads, buns, rolls, and bakery goodies to retail and foodservice customers, will be able to overcome this short-term challenge.
Analyst Pinheiro said Flowers Foods, which competes with companies like Sara Lee Corp SLE.N and George Weston Ltd (WN.TO), has an edge over its competitors due to its strong operating infrastructure and distribution efficiency.
Earlier this month, Sara Lee posted a third-quarter profit that missed analysts’ estimates and cut its full-year outlook.
Pinheiro has a “buy” rating on Flowers Foods stock, which was up almost 5 percent at $26.73 in morning trade on the New York Stock Exchange. It hit a lifetime-high of $28.47 earlier in the session.
For the first quarter, Flowers Foods posted a net income of $35.8 million, or 39 cents a share, compared with $28.5 million, or 31 cents a share, a year ago.
Sales rose about 11 percent to $676.7 million.
Analysts expected the Thomasville, Georgia-based company to earn 35 cents a share, before special items, on sales of $663.4 million.
Flowers Foods, whose brands include ButterKrust, Cobblestone Mill and Nature’s Own, raised its fiscal 2008 earnings view to between $1.15 and $1.23 a share, from its prior view of $1.07 to $1.17 a share.
It now expects sales of $2.22 billion to $2.27 billion for the period. The company had previously forecast sales of $2.21 billion to $2.26 billion.
Analysts on average were expecting earnings of $1.14 per share, before special items, on sales of $2.22 billion, according to Reuters Estimates. (Editing by Himani Sarkar)