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Farmer Bros. Profit, Sales Drop

California

The coffee roaster's earnings decline to $2.6million as revenue sinks to $51.5 million. A new battle lies ahead.

February 18, 2004|Jerry Hirsch | Times Staff Writer

Sales and profit continue to evaporate at commercial coffee roaster Farmer Bros. Co.

Earnings fell for the ninth straight quarter, this time plunging 56% to $2.6 million, or $1.46 a share, in its fiscal second quarter ended Dec. 31 from $5.9 million, or $3.24, in the same period a year earlier, the Torrance-based company said Tuesday.

Revenue also slid again, dipping 5% to $51.5 million. Farmer Bros. hasn't posted a year-to-year increase in quarterly sales for five consecutive periods.

Farmer Bros. blamed its profit decline on a variety of problems. The company has been saddled with millions of dollars in legal fees resulting from a long-standing war between two branches of the founding family. The dispute was settled in December when the company agreed to buy out the holdings of one of the parties for $111 million, leaving the family of Chairman Roy F. Farmer in control of the business.

Farmer Bros. also said higher prices for green, unroasted coffee and a slowly recovering economy contributed to its worsening financial performance.

The coffee roaster -- one of California's largest publicly traded food processors -- faces another battle next week over its plan to reincorporate in Delaware. Dissident shareholders object to the proposal, which they say would make it harder for non-family stakeholders to push for changes. Shareholders are scheduled to vote on the proposal at the company's annual meeting Monday.

Farmer Bros.' performance was in stark contrast to that of California's other large public coffee company, Emeryville-based Peet's Coffee & Tea Inc. Peet's said last week that profit rose 22% to $2.7 million, or 20 cents a share, on higher sales of $34.5 million in the quarter ended Dec. 28.

Peet's, which operates a chain of retail coffee stores and markets its own brand of coffee, was helped by increased grocery chain penetration. Its coffee was on the shelves of 2,700 stores by year end, compared with 1,000 a year earlier.

Farmer Bros. primarily sells to restaurants and institutions such as hospitals and food services. Before its earnings announcement, Farmer Bros. shares rose $5.13 to $309.13 on Nasdaq.

As in previous quarters, Farmer Bros. declined to discuss its plans for improving operations.

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