Milling & Baking News - July 29, 2008 - 15

Financial Results

Frito-Lay and Quaker post strong
second-quarter financial results
PURCHASE, N.Y. - Strong sales
growth keyed by innovation in Cheetos and SunChips helped deliver another quarter of profit growth at the
Frito-Lay North America subsidiary of
PepsiCo, Inc. during the second quarter and first half ended June 14.
F.L.N.A. operating profit in the quarter was $735 million, up 8% from $682
million during the same quarter of the
previous year. Revenue in the segment
was $2,950 million, up 8% from $2,723
million during the same quarter of 2007.
For the first six months of fiscal 2008, operating profit at F.L.N.A. totaled $1,368
million, which compared with $1,292
million in the same period a year ago.
Sales were $5,680 million, up 8% from
$5,276 in the first half of fiscal 2007.
The company said the gain in sales
reflected 2% volume growth, led by
double-digit growth in trademark

Cheetos, Ruffles, Quaker Chewy Granola and SunChips. Also contributing
was innovation, led by new
flavors in the SunChips
brand, which also launched
a "Made From the Sun"
marketing campaign.
"Weight-outs and a promotional shift to help manage
potato supply constraints led
to a high single-digit volume
decrease in trademark Lay's,
but revenues were up high
single-digits," PepsiCo said.
"While pricing actions also
contributed to a mid singledigit volume decrease in
trademark Doritos, revenues were up
low single-digits. Single-serve packages
continued to provide volume growth."
Quaker Foods North America, another PepsiCo subsidiary, posted op-

Panera Bread net climbs 24% in second quarter
ST. LOUIS - Net income at Panera
Bread Co. in the second quarter ended
June 24 totaled $15,706,000, equal to 52c
per share on the common stock, up 24%
from $12,635,000, or 40c per share, in the
same period a year ago. Net sales were
$320,868,000, up 27% from $252,959,000.
For the quarter, company-owned
bakery-cafe sales were up 6.5% and
franchise-operated bakery-cafe sales
were up 4.8%.
Panera said its second-quarter operating margin was up 100 basis points
driven by improvement in its bakery
cafe margin of 170 basis points and additional sales leverage against deprecia-

tion and amortization, general and administrative expenses and pre-opening
expenses. The margin improvement
occurred against the backdrop of $6.25
million in wheat cost increases. Panera
said it was able to overcome these costs
through category management and operating cost reduction initiatives.
During the second quarter the company opened 19 new bakery-cafes systemwide and closed one.
For the six months ended June 24,
Panera had net income of $28,146,000,
or 94c per share, up from $27,679,000, or
88c per share. Sales were $625,847,000,
up 27% from $492,634,000. MBN

CHS earnings ease 21% in third quarter
ST. PAUL, MINN. - Net income at
CHS Inc. in the third quarter ended
May 31 fell to $188,716,000, down 21%
from $239,596,000 in the third quarter
of fiscal 2007.
Revenues for the period, meanwhile, rose 97% to $9,336,609,000
from $4,732,465,000 in the same period a year ago. Improved sales were
attributed to higher prices for commodities such as grain, crop nutrients and energy.
The company's Ag Business segment, which consists of CHS's agronomy, grain marketing and retail operations, posted operating earnings of
$149,681,000 on sales of $6,005,755,000,
16 / July 29, 2008

Milling & Baking News

up sharply from $30,292,000 and
$2,411,945,000, respectively, in the
third quarter of fiscal 2007.
"Our grain marketing operations
improved earnings by $65.5 million
during the three months ended May
31, 2008, compared with the same
three-month period in fiscal 2007,
primarily from increased grain
volumes, greater margins on those
grains, and strong earnings performances from our joint ventures,"
CHS said.
Earnings also were up significantly in CHS Processing operations,
which include its oilseed processing,
wheat milling, food production and

erating profit of $122 million, which
compared with $117 million during
the same quarter of the previous year.
Revenue was $406 million, up 4% from
$390 million during the same quarter of 2007. For the six months ended
June 14, operating income
was $288 million, up 5%
from $273 million in the
same period a year ago.
Revenues in the six months
were $901 million, up 6%
from $853 million.
The company said volume in its Q.F.N.A. business grew 2%, reflecting an
increase in Quaker Oatmeal,
grits and Rice-A-Roni.
Providing an update on
its Quaker manufacturing
plant that was shut down
at the end of the second quarter due to
flooding that occurred in Cedar Rapids,
Iowa, PepsiCo said it expects to be back
to full production levels by mid-August,
but cautioned that "we are experiencing
supply disruptions, and many Quaker
products have been on allocation."
Companywide, PepsiCo net income
in the second quarter totaled $1,699
million, equal to $1.05 per share on
the common stock, up from $1,557
million, or 94c per share, during the
same quarter of the previous year. Net
revenue was $10,945 million, up 14%
from $9,607 million during the same
quarter of 2007.
For the six months ended June 14,
net income was $2,847 million, or $1.76
per share, up 7% from $2,653 million,
or $1.59 per share, during the same period of the previous year. Net revenue
for the period was $19,278 million, up
14% from $16,957 million during the
same period of the previous year. MBN
renewable fuels operations. Operating earnings in the third quarter
were $29,151,000, up from $7,044,000,
while sales rose to $886,820,000 from
$526,513,000.
CHS said earnings from oilseed
processing operations increased $13.4
million during the third quarter behind improved margins in crushing
operations, while earnings from wheat
milling joint ventures rose $6 million.
The company's share of earnings from
Ventura Foods, its packaged foods
joint venture, fell $6.5 million during
the quarter.
Energy earnings fell to $29,737,000
from $236,355,000 during the third
quarter. Sales, meanwhile, rose 40% to
$3,058,367,000. MBN
bakingbusiness.com / world-grain.com

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Milling & Baking News - July 29, 2008

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