Foodmakers shares drop in quarter on high costs
- |
MILWAUKEE—Shares of the nation's foodmakers fell in the last three months as the industry faced continued pressure on prices for key ingredients like corn and oil.
According to the Dow Jones U.S. Food Products Index, the stocks dipped about 1.25 percent during the quarter, which ended Tuesday.
Over the past year the index, which is made of about two dozen companies, has dropped 12 percent.
Times are tough for foodmakers. The prices for key commodity ingredients have risen to record highs, which forced many companies to hedge their buys. But now some of those prices have moderated and companies are losing money on the hedges.
Meanwhile, they're raising their own prices, hoping consumers will help make up some of the difference. Foodmakers are enjoying relatively healthy sales, though, as more consumers abandon pricier restaurants in favor of eating at home. But sales to restaurant companies have been hurting, given the decline in that sector.
The stocks that recorded the largest declines included Pilgrim's Pride Corp. and Integrated BioPharma Inc. Pilgrim's Pride shares have tumbled more than 80 percent in the quarter. The company, the nation's largest chicken producer, last week said it expects a "significant" loss in the fiscal fourth quarter and was so sagged by debt that it may not be able to meet the terms of its loan agreements. But it said on Monday its lenders have agreed to continue to provide liquidity under the credit facilities during the 30-day period ending Oct. 28.
Integrated BioPharma, which makes vitamins and nutritional supplements, shares slid about 68 percent, in the period.
Stocks that performed well during the quarter include nutritional supplement maker USANA Health Sciences Inc., whose shares were up about 53 percent and weight management company NutriSystem Inc., whose shares were up more than 25 percent in the quarter.
Big name stocks like Kraft Foods Holding Inc., H.J. Heinz Co. and Hormel Foods Corp. were all up in the quarter, while Sara Lee Corp. shares fell.
Kraft's shares grew 15 percent in the quarter, while shares for both Heinz and Hormel rose more than 4 percent. Sara Lee's stock, however, gained about 3 percent.
