February 24, 2009 / 5:14 PM / 9 years ago

UPDATE 1-Lower costs, Millbrook buoy United Natural Q2 margins

* Lower costs, Millbrook specialty biz boost margins

* Q2 revenue misses Street

* Shares up more than 21 pct on high volumes

Feb 24 (Reuters) - Organic and natural foods distributor United Natural Foods Inc’s (UNFI.O) quarterly profit almost doubled as lower fuel costs and improved performance at its Millbrook Specialty business offset sluggish sales.

United Natural saw higher margins at the specialty unit and higher fuel surcharge revenue due to improved average trailing diesel prices. The fuel surcharge served to partially offset higher diesel fuel costs in operating expenses.

The company, which bought Millbrook in November 2007 to expand its specialty distribution business consisting of ethnic, kosher, gourmet, organic and natural foods, said quarterly gross margin was 19.1 percent, up from 18.6 percent a year earlier.

United Natural, based in Dayville, Connecticut, reported second-quarter net income of $13.6 million , compared with $9.1 million, in the year-ago period.

Net sales at the company, which supplies food to conventional supermarket chains, independent retail operators and natural product superstores like Whole Foods Market Inc WFMI.O, rose 2 percent to $847.6 million.

Shares of the company touched a high of $15.62, before paring some gains to trade up $2.55 at $15.45 noon Tuesday on Nasdaq.

For the alerts, please click [ID:nWNAB6044] (Reporting by Dhanya Skariachan in Bangalore; Editing by Anthony Kurian)

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