Hain Celestial’s UK brands

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US consumer foods giant Hain Celestial has blamed soaring food prices and falling consumer confidence in the UK for a steep drop in full-year revenues.

Net sales for the year ended 30 June declined 4% to $1.9bn (£1.6bn), with the figure improving to just 0.4% down year on year when adjusted for currency translation, acquisitions and divestments and discontinued brands, while the top line rose 1.4% in the fourth quarter to $457m (£386.4m) on a reported basis but fell 0.6% when adjusted.

The group, which owns the likes of Linda McCartney’s, Clarks, Ella’s Kitchen, Frank Cooper’s, Hartley’s, New Covent Garden Soup and Sun-Pat, said the results were below expectations following “unprecedented volatility and numerous challenges”, especially in Europe.

International net sales slumped 19% in the fourth quarter to $160.2m as total store sales declined and the group was hit by “softness” in the plant-based protein and beverage categories.

Hain pointed to European and UK markets for driving the 16% fall in full-year sales to $728.7m, with the loss of a large non-dairy co-manufacturing customer hurting the group in Europe and tumbling volumes and sales declines in the UK being caused by high inflation and lower consumer confidence in the economy.

Gross profits in the international division slipped 16% to $167.9m as a result, with higher energy costs and supply chain difficulties also contributing to the lower bottom line, while adjusted EBITDA fell 18% to $110.1m.

Net sales in North America jumped 17% to $296.9m in the final quarter and 5% to $1.2bn for the year thanks to price increases and stronger sales in snacks, baby and personal care. However, profits still came under pressure in its domestic market as a result of inflationary and supply chain challenges, such as continued industry-wide distribution and warehousing cost pressures driven by labour shortages, freight costs and the write-off of unprofitable SKUs.

Operating profits in North America declined 27% to $93.7m, while group-wide adjusted operating profits came in at $141.8m for the year, compared with $199.5m in 2020/21.

CEO Mark Schiller said: “While our results have been below our expectations and we still face challenges, especially in Europe, we exit the year with strong topline momentum in North America, improving supply chain performance, additional pricing and stabilising total store revenues in the UK.

“Looking forward to fiscal year 2023, we remain confident in our strategy and are poised to restore net sales and EBITDA growth as the year progresses.”

Hain added it expected net sales and adjusted EBITDA on a constant currency basis of -1% to +4% in the new financial year, with 2023 price increases - most of which have already been accepted by retail partners - to offset expected mid-teens year-over-year inflation.

Morning update

British Honey Co, the producer of premium British honey and craft spirits products, experienced a “solid” first half performance but warned of a “more challenging” second half as its share remain suspended.

The group said its solid first half of 2022 by increased “white label” business which has carried over from the fourth quarter of 2021, when a number of unusually large orders were received.

The company’s proprietary brands business also performed well in the first half.

However, in line with what is being widely reported across the consumer sector, the company is facing a tougher second half of the year, exacerbated by substantial domestic cost of living increases and international geo-political instability as the war in Ukraine continues, inflating raw materials costs and adding to supply-chain issues.

It said a number of “white label” customers are reporting a more challenging sales environment and as a result are taking a more cautious approach to stock levels.

This in turn is impacting the group’s trading, although is being offset to a degree by an increase in business with our supermarket customers.

The net result is that the full year 2022 are now expected to fall below previous market expectations and the board now expects to deliver revenues of approximately £6m for the current financial year.

The group stressed that, even in this currently more challenging trading environment, it has not only retained all of its white label customers but have won new ones which “bodes well for the future”.

It also continues to take significant costs out of the business through improved operational efficiencies, tight control of overheads and cash management as it continues to move towards profitability.

The group’s shares remain suspended on London’s AQUIS exchange after it announced on 30 June it required additional time to audit its 2021 full year results.

It said “good progress” is being made on the audit and no major issues are currently outstanding.

It is now anticipated that the Company will be able to release its 2021 final results in mid- to late September 2022, whereupon trading in its shares on the AQUIS Exchange is expected to resume.

The 2021 full year results are expected to be in line with market expectations.

On the markets this morning, the FTSE 100 has started the day up 0.5% to 7,514.1pts.

Risers include Bakkavor, up 7.6% to 85p, Devro, up 6.2% to 196.5p and Haleon, up 3.1% to 271.7p.

Fallers include Kerry Group, down 2.4% to €106.15, Coca-Cola HBC, down 1.3% to 1,949.5p and Britvic, down 0.9% to 782.5p.

Yesterday in the City

The FTSE 100 closed up 0.1% to 7,479.7pts yesterday.

On another quiet day in the City, risers included Naked Wines, up 7.1% to 139.5p, Kerry Group, up 3.3% to €108.75, SSP Group, up 1% to 214.6p, Glanbia, up 0.9% to €12.98 and Hotel Chocolat, up 0.4% to 135.5p.

Amongst yesterday’s fallers were Bakkavor, down 10.2% to 79p, FeverTree, down 4.9% to 904.5p, Marks & Spencer, down 4.4% to 121.6p, McBride, down 4.1% to 22.1p, Britvic, down 4% to 789.6p, Coca-Cola HBC, down 3.9% to 1,975.5p and Virgin Wines, down 3.8% to 63p.