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How Hain Celestial plans to save $100 million

May 9, 2016
Food & Drink

The Hain Celestial Group, Inc. announced big changes to take effect in the new fiscal year as part of Project Terra, a strategic review the company launched in November.

In addition to generating $100 million in global cost savings over the next two fiscal years, Hain Celestial is restructuring its business into five strategic platforms, launching a venture unit and selling brands that no longer fit within its growth strategy.

To oversee productivity savings identified under Project Terra, the company has promoted James R. Meiers, currently chief supply chain officer for Hain Celestial U.S., to the newly created position of chief operations officer. In this role, Mr. Meiers will have responsibility for achieving cost savings across the company’s worldwide operations. Plans include optimizing plants, procurement and co-packers and rationalizing the product portfolio.

Beginning in the new fiscal year, the company will establish five strategic platforms within Hain Celestial U.S. with the purpose to drive accelerated net sales and margin growth. The five platforms, defined by common consumer need, route-to-market or internal advantage, will be: Fresh Living, which includes poultry, yogurt, plant-based proteins and other refrigerated products; Better-for-You Baby, which includes infant foods and formula and personal care products for babies and toddlers; Better-for-You Snacking, which includes wholesome snack products; Better-for-You Pantry, which includes core consumer staples; and Pure Personal Care.

Additionally, Hain Celestial is launching Cultivate Ventures, a venture unit with the purpose to strategically invest in relaunching and refreshing Hain’s smaller brands in high-growth categories, including SunSpire chocolates and DeBoles pasta; to incubate small acquisitions; and to invest in concepts, products and technology with a health and wellness focus.

Hain Celestial also has identified certain brands representing approximately $30 million in sales that it intends to sell as a group.

“We are excited about the launch of our new platforms in fiscal year 2017, which are uniquely aligned with consumer eating habits and usage needs,” said Irwin D. Simon, founder, president and chief executive officer. “We believe our platforms represent distinct opportunities for incremental growth and margin improvement. We expect this new approach will enable us to define more distinct channel strategies for our branded product offerings, and ensure that we continue to extend our organic and natural industry leadership position.”

Net income in the third quarter ended March 31 was $48,985,000, equal to 47c per share on the common stock, up 47% from $33,394,000, or 33c per share, in the same period of the previous year. Adjusted earnings per diluted share increased 9% over the prior-year period. Net sales increased 13%, or 15% on a constant currency basis, to $749,862,000 from $662,739,000.

“Our net sales reflect the strong performance across our businesses led by Hain Celestial United States, Hain Pure Protein, Hain Celestial United Kingdom and Hain Celestial Europe as well as Hain Celestial Canada,” Mr. Simon said. “The diversification of our product portfolio with leading organic, natural and better-for-you brands around the world, combined with our team’s solid execution of our operational initiatives fueled our financial performance. We are extremely pleased with our U.S. results where we returned to growth in the third quarter and expect these trends to continue.”

For the full year, the company expects total net sales in a range of $2.946 billion to $2.966 billion, up 9% to 10% over fiscal 2015, and an increase of approximately 6% to 9% in earnings per diluted share.

By Monica Watrous

Source: Baking Business

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