Story URL: http://news.medill.northwestern.edu/chicago/news.aspx?id=87019
Story Retrieval Date: 3/10/2014 8:15:28 AM CST
Tootsie Roll Industries Inc. reported sharply lower first-quarter earnings due to higher costs for raw materials and fuel, missing analyst expectations.
Late Wednesday, the Chicago-based maker of confectionary products reported net income of $6.45 million, or 12 cents per share, for the quarter ended March 29. That’s a decrease of 34 percent from the same period in 2007 when the company earned $9.81 million, or 17 cents per share.
The company missed analyst expectations of 16 cents per share. Only a single analyst issues an estimate for the company.
“The company’s per share earnings for first quarter 2008 did benefit from common stock purchases in the open market resulting in fewer shares outstanding,” Chairman Melvin Gordon stated in the press release. The average shares outstanding for the company decreased by 1.36 million shares since the first quarter of last year.
The company’s earnings were hurt due to less favorable exchanges rates affecting margins on products manufactured in Canada.
Tootsie Roll reported net product sales of $90.3 million, a decrease of 2.8 percent from the same period last year, when the company had net product sales of $92.9 million.
The decrease in sales was due to the struggling economy, Gordon explained in the press release. The company is battling higher costs in addition to lower sales and has implemented price increases to counteract the difficult environment.
“The company does do a certain amount of buying of currencies and a certain amount of hedging,” a spokeswoman added.
Despite the controls, the company has not been able to recover all of the higher raw material costs during the first quarter, according to Gordon.
Tootsie Roll’s stock closed down 34 cents at $24.07 Thursday, a decrease of 1.4 percent.