Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=225078
Story Retrieval Date: 12/21/2013 3:57:38 AM CST
Tootsie Roll Industries Inc. reported net earnings rose 13.6 percent in the third quarter even as sales fell 4 percent compared with the year-ago period. CEO Melvin Gordon attributed the earnings increase in part to lower ingredient costs and a lower effective income tax rate.
For the quarter ended Sept. 28, net income rose to $26 million, or 44 cents per share, from $22.9 million, or 38 cents per share, in the year-ago period.
Total sales fell to $191.8 million from $200.3 million in the year-ago period.
“Third quarter 2013 net earnings did benefit from more favorable ingredient costs and plant efficiencies driven by capital investments,” Gordon said in Wednesday’s release.
Plant efficiencies include a continuing push toward automation, Chief Financial Officer Ellen Gordon said in a phone interview.
“It’s a very important philosophy of ours to make sure that we can produce the best quality products in the most efficient manner,” she said.
In-depth third-quarter data was not available by press time. Ellen Gordon said that the company files its quarterly reports with the Securities and Exchange Commission about 10 days after its quarterly press releases.
Candy manufacturers tend to see a substantial increase in third-quarter sales, reflecting pre-Halloween and back-to-school purchases. Tootsie Roll Industries’ third-quarter 2012 sales, for example, accounted for 36.6 percent of 2012 revenue.
Tootsie Roll Industries makes Tootsie Rolls, Tootsie Roll Pops, Junior Mints, Blow-Pops, Dubble Bubble and other candies at plants in seven locations across North America.
The company, which had $546 million in 2012 revenue, faces stiff competition from other large confectionery manufacturers like Mondelez International Inc. (with $14.69 billion in annual confectionery revenue), Nestlé SA ($11.14 billion in confectionery revenue) and Barry Callebaut AG ($5.21 billion). While those companies have an international presence, Tootsie Roll Industries’ principal markets are the United States, Canada and Mexico.
“We are a niche player,” Ellen Gordon said. “We don’t compete for the same type of product.”
Few analysts cover the Chicago-based company. The firm EVA Dimensions uses software to rate the performances of more than 9,000 companies, and maintains a sell rating for Tootsie Roll Industries.
For the first nine months of the year, Tootsie Roll Industries reported sales of $404.1 million, down 3.4 percent from the year-ago period of $418.2 million. Net earnings for the first nine months rose 10.9 percent to $43.5 million, or 73 cents per share, from $39.2 million, or 65 cents per share, in the year-ago period.
The company’s stock fell 1 cent to close Thursday at $32.10.