Revenue slightly ahead of estimates
The Hain Celestial Group’s (HAIN) net revenue of $752.6 million for fiscal 2Q16 beat estimates slightly by 0.43%. The company also delivered year-over-year revenue growth of 8.1%. On a constant currency basis, net sales increased by 11% over last year’s net sales of $696.4 million.
There was an impact of $18.3 million as a result of foreign exchange rate movements compared to 2Q15. The second quarter of fiscal 2016 was the largest quarter of revenue in Hain Celestial’s history. The company showed strong sales growth in constant currency terms in some of its major brands, including Plainville Farms, Tilda, Ella’s Kitchen, Sun-Pat, The Greek Gods, Alba Botanica, and Avalon Organics. The Empire, Kosher Valley, Joya, and Live Clean brands acquired after fiscal 2Q15 also contributed to the revenue growth.
Irwin D. Simon, founder, president, and chief executive officer of Hain Celestial, stated, “Our record net sales reflect the continuing strong performance from the United Kingdom and Rest of World segments, which collectively grew 12% in constant currency, and the Hain Pure Protein Corporation segment (“HPPC”), which grew 21% excluding the acquisition of Empire. Our strong sales growth was impacted in the quarter primarily by reductions in inventories at certain customers in the United States segment. We were able to deliver these strong results, reflecting our global diversified business model across Hain Celestial’s organic and natural brands, product categories, customers, and geographies.”
Gross margin declined
HAIN’s gross margin for fiscal 2Q16 was 23.7%, which was slightly less than the gross margin of 25.7% in fiscal 2Q15. Factors that impacted the gross margin decline were the composition of the company’s US segment sales mix, the impact of Project Castle, increased investment in trade spending in the United States to drive current and future consumption, and the cost of US dollar purchases in the company’s Canadian business. The impact from these factors was partially compensated not only by sales mix and demand at both Hain Pure Protein Corporation and Tilda but also through increased branded sales in the personal care business in Canada.
Hain Celestial’s competitors in the industry include Cal-Maine Foods (CALM), Mead Johnson Nutrition Company (MJN), and Pinnacle Foods (PF). They recorded revenues of $546 million, $967 million, and $636 million, respectively, for their last reported quarters. The PowerShares DWA Consumer Staples Momentum Portfolio (PSL) invests 2.4% of its holdings in PF.