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What Contributed to Pinnacle Foods’ Revenue in Fiscal 1Q16?

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Revenue benefited from the Boulder Brands acquisition

Pinnacle Foods’ (PF) revenue grew by 13.3% to $754 million in fiscal 1Q16 as compared to revenue of $665 million in fiscal 1Q15. Revenue, however, missed analysts’ estimate of $775 million by 3%. The Boulder Brands acquisition, which closed on January 15, 2016, and growth in the Birds Eye Frozen segment, contributed to the rise in revenue. However, this increase was offset by lower sales of the Duncan Hines Grocery segment.

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What contributed to revenue?

The benefit from the Boulder Brands acquisition was around 15.2%, and another 0.1% came from net price realization. This included an unfavorable impact on net pricing from higher new product introductory expenses. These benefits were offset by a lower volume/mix of 1.7% and an unfavorable foreign currency translation of 0.2%.

Segmental contribution to sales

Pinnacle Foods operates through three segments: the Birds Eye Frozen segment, the Duncan Hines Grocery segment, and the Specialty Foods segment. Net sales for the Birds Eye Frozen segment grew by 3.8% to $330 million, contributing 44% to total revenue. This was driven by continued strong performances of the Birds Eye franchise and the Gardein brand.

Net sales for the Duncan Hines Grocery segment fell 6.9% to $243.2 million. This reflected growth of Vlasic pickles sales including the impact of higher new product introductory costs. Net sales also decreased due to the effect of a lower volume/mix of 6.3%, an unfavorable foreign currency translation of 0.5%, and a lower net price realization of 0.1%. Net sales for the Specialty Foods segment also fell 6.9% to $80.2 million. This reflected lower volume/mix of 6.2% and lower net price realization of 0.7%.

Pinnacle Foods’ peers Tyson Foods (TSN), Hain Celestial Group (HAIN), and Mead Johnson Nutrition Company (MJN) reported revenues of $9.1 billion, $753 million, and $962 million in their last quarters, respectively. The First Trust Capital Strength ETF (FTCS) and the Fidelity MSCI Consumer Staples Index ETF (FSTA) invest 2.1% and 0.82% of their respective portfolios in MJN.

In the next article in this series, we’ll discuss how Pinnacle Foods’ segments contributed to its 1Q16 operating profit.

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