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Hain Celestial’s HPPC Segment Grew 64% in Fiscal 2Q16

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Hain Celestial’s US segment

Hain Celestial Group (HAIN) operates through four segments: the United States, the United Kingdom, HPPC (Hain Pure Protein), and Rest of World, comprised of Canada and Continental Europe.

Hain Celestial’s US segment reported improved results when compared to the fiscal 1Q16. However, it declined when compared to 2Q15. It recorded 2Q16 net sales of $342 million, a fall of 4.7% compared to 2Q15. Operating earnings for this segment dropped by 17% to $52 million in comparison to $63 million in fiscal 2Q15. The Canadian business drove the company’s total net sales by delivering high single-digit growth on a constant currency basis.

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Other segments

In the United Kingdom segment, net sales came in at $194.2 million, a fall of 3.3% compared to 2Q15. In local currency, however, net sales rose. The soup, grocery, rice, and even the desserts business contributed to sales. HPPC reported net sales of $141.7 million, and the Rest of World segment reported net sales of $74.4 million. Both these segments showed impressive sales growth of 64% and 34%, respectively. HHPC had a good quarter and posted a strong gross margin of 16%.

In general, the United Kingdom segment and HPPC showed better operating earnings of $18.9 million and $4.6 million last quarter as compared to fiscal 2Q15. Management mentioned that the company benefited from acquisitions last quarter in all its segments and hence will continue with its strategy of accretive acquisitions.

The company’s competitors in the industry include Pilgrim’s Pride Corporation (PPC), McCormick & Company (MKC), and Keurig Green Mountain (GMCR). They reported operating margins of 10.9%, 17.6%, and 13.9%, respectively, in their last quarters. The Guggenheim Defensive Equity ETF (DEF) invests 1.7% of its portfolio in GMCR.

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