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Dreyer's Grand Ice Cream Reports First-Quarter Loss

Earnings: Company cites lower-than-expected sales and higher cream and energy costs.

April 03, 2001|From Bloomberg News

Dreyer's Grand Ice Cream Inc., maker of Dreyer's and Edy's ice creams, had a first-quarter loss and said Monday that 2001 profit will fall short of forecasts because of higher cream and energy costs.

Oakland-based Dreyer's expects to earn $1 to $1.05 a share in 2001, less than the average estimate of $1.15 per share from First Call/Thomson Financial. The company earned 80 cents a share last year. The company lost 17 cents to 19 cents a share in the first quarter, Dreyer's said in a statement.

First-quarter sales were less than forecast after Dreyer's raised prices due to a surge in cream costs. Butter prices, which determine cream costs, have risen 45% since last year. Rising energy costs in California, where the company makes about 30% of its ice cream, sorbet and other desserts, probably will add about 6 cents a share to its costs in 2001.

The amount of Dreyer's ice cream sold in the 12 weeks ended Feb. 25 fell 6.3%, wider than the 2.2% drop across the industry, according to the International Research Institute. Sales in March "recovered nicely" and total dollar sales increased by about 20%, Dreyer's said.

"It is still early in the year with the bulk of seasonal sales and profits still to come during the second quarter and third quarter," Deutsche Banc Alex. Brown analyst Eric Katzman said in a report. He lowered his per-share 2001 profit forecast to $1.04 from $1.18.

Dreyer's shares fell 94 cents to close at $25 on Nasdaq.

The company was expected to break even in the first quarter, according to the average estimate of four analysts surveyed by First Call. The company had a profit of 8 cents in the year-earlier quarter.

Cream costs rose as U.S. milk production fell. Butter prices are expected to jump to as much as $1.54 a pound in 2001 from an average of $1.18 last year, the company said. Costs for vanilla also increased, the company said.

(BEGIN TEXT OF INFOBOX / INFOGRAPHIC)

Not So Creamy

A rise in the cost of ingredients as well as energy forced ice cream maker Dreyer's to revise its 2001 profit forecast. Shares have lost about 20% this year.

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Dreyer's monthly closes and latest on Nasdaq

Monday: $25, down 94 cents

Source: Bloomberg News

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