Bloomberg News

TreeHouse Foods Falls as Profit Trails Estimates: Chicago Mover

January 23, 2012

Jan. 20 (Bloomberg) -- TreeHouse Foods Inc., the maker of McCann’s Irish Oatmeal spun off from Dean Foods Co. in 2005, fell the most in more than 17 months as preliminary earnings missed analysts’ estimates after consumers limited purchases.

TreeHouse dropped 9.7 percent to $56.76 at the close in New York, the biggest decline since Aug. 5, 2010. The shares gained 28 percent last year.

Consumers are gravitating to club and dollar stores instead of traditional grocers, and switching to less costly brands and smaller-size selections, the Oak Brook, Illinois-based maker of hot cereals, pickles, jams and other foodstuffs said today in a statement. TreeHouse said it also saw a “negative effect” on seasonal sales from warm weather in the U.S. Midwest and Northeast.

“The consumer took a little bit of a step back in their buying patterns of food,” Akshay Jagdale, a New York-based analyst at KeyBanc Capital Markets who advises holding the shares, said in an interview.

“Volumes are expected to be weak when pricing goes up and there’s been a significant amount of pricing that the industry has taken to cover commodity costs,” Jagdale said.

Adjusted profit was probably 84 cents to 87 cents a share in the fourth quarter and $2.70 to $2.73 for the full year, TreeHouse said. The average of analysts’ profit estimates in a Bloomberg survey was $1.07 for the quarter and $2.94 for the year. The company is scheduled to release earnings on Feb. 10.

TreeHouse typically locks in raw ingredient costs six months going forward, Chief Executive Officer Sam Reed said in a conference call on Nov. 4.

--Editors: Romaine Bostick, Niamh Ring

To contact the reporter on this story: Leslie Patton in Chicago at lpatton5@bloomberg.net

To contact the editor responsible for this story: Kevin Orland at korland@bloomberg.net


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