Organic dairy foods group Horizon Organic reported an increase in sales of 21 per cent in the US and 20 per cent in the UK during the second quarter of 2003, compared with the second quarter of 2002.
Earnings from continuing operations declined to $534,000 (€469,000) from $647,000 in the second quarter of 2002. These results include $691,000 in transaction costs associated with the announced merger with Dean Foods Company, which on an after-tax basis impacted earnings by $0.04 per diluted share.
These earnings, excluding the $0.04 of transaction costs, compare favorably to analysts' consensus of $0.08, which also does not include transaction costs. Net income for the second quarter of 2003, including discontinued operations and transaction costs, was $183,000 or $0.02 per diluted share, compared with net income of $353,000, or $0.03 per diluted share, in the 2002 second quarter.
The company also reported a 23 per cent increase in US milk sales. This has been driven by the success of ultra pasteurized milk, which now accounts for 57 per cent of total milk sales.
In addition, Organic Horizon reported an increase of 19 per cent in sales of Rachel's Organic branded products in the UK, driven largely by growth of 69 per cent in Rachel's Organic retail-branded milk.
On June 30, Horizon Organic and Dean Foods announced a definitive merger agreement under which Dean will acquire the 87 per cent of Horizon Organic's shares that it does not already own for $24 a share.
"Our leadership in the organic industry, coupled with the growing public awareness of the many advantages of healthy organic foods, continues to generate strong sales growth," said Chuck Marcy, president of Horizon Organic.
" With the backing of Dean Foods and its nation-wide distribution network, this trend is likely to accelerate. At the same time, the Dean Foods offer provides an immediate opportunity for our shareholders to capitalize on this growth."
Horizon Organic is the leading brand of organic milk in both the UK and the US. In the UK, the company markets organic yoghurt, milk and butter under the Rachel's Organic brand.