CHICAGO, July 25 /PRNewswire-FirstCall/ -- The Wm. Wrigley Jr. Company
(NYSE: WWY) today announced record quarterly sales of $1.2 billion, an
increase of 16 percent on worldwide shipment increases of 21 percent.
Net earnings for the quarter were $0.51 per diluted share -- including
the negative impacts of previously announced restructuring charges ($0.02)
and new accounting requirements to expense stock options ($0.03) -- versus
$0.57 for the year ago period. On a non-GAAP basis, excluding the impact of
restructuring and options costs, 2006 second quarter per share earnings
would have been $0.56, $0.01 below the prior year. All per share figures
have been adjusted to reflect the 5-for-4 stock dividend that took place on
May 1, 2006.
"We remain pleased with our strong top-line growth and the continued
vitality of our core gum business worldwide," said Bill Wrigley, Jr.,
Chairman, President and Chief Executive Officer. "Given the dynamic,
competitive nature of the marketplace and the need to improve margins, we
are taking aggressive steps to improve our performance to ensure that more
of that top-line success translates into stronger bottom-line results. We
are already underway with our plans to focus investments where they will
have the most impact, streamline operations, and better align our
management team so that we can fully leverage our global presence and
market share leadership positions."
In terms of Wrigley's core business, global gum shipments were up 8% in
the quarter, and the Company gained gum share in a number of key
competitive countries, such as France and Canada; extended share leadership
in the key geography of China; and is gaining business momentum in India.
In the U.S. marketplace, Wrigley's share of gum remains above 60 and near
its all-time high, but following its 8 share point gain over the past five
years, the Company is seeing stepped-up new product and promotional
activities by competitors.
"We are taking a very intentional approach to addressing both
opportunities and challenges in the U.S., and are confident in the strength
and quality of product and marketing initiatives that are currently rolling
out into the marketplace," added Wrigley.
The Altoids(R), Life Savers(R), Creme Savers(R) and Sugus(R) brands
were acquired by Wrigley last summer as part of its strategy to become a
broader- based confectionery company. Those brands have added critical mass
to the Company's overall non-gum confectionery business -- that now
accounts for just over 10 percent of worldwide sales -- and their
integration into overall Wrigley operations is nearing completion.
"As we have previously stated, in addition to being a period of tough
comparisons given the outstanding results for the first half of 2005, the
first half of 2006 has involved continuing integration and realignment of
and investment in these acquired brands in terms of production capacity,
distribution footprint and merchandising and marketing support," noted Bill
Wrigley, Jr. "Over the past twelve months, we have taken the necessary
steps to establish a base of business upon which we can build. As 2006
progresses, we anticipate improved momentum for these brands in response to
our steady investment in innovation and brand support behind them."
Sales Performance
Second quarter global sales grew by $167 million or 16 percent over the
same quarter last year. Wrigley's core business accounted for a little less
than half of the overall increase, with excellent shipment gains for both
gum (+8 percent) and non-gum items (+28 percent) in the quarter. The
acquired confectionery brands accounted for just over half of the quarterly
sales gain.
"Around the world, our chewing gum business remains very strong and
continues to grow at a vigorous pace," said Ralph Scozzafava, Vice
President - Worldwide Commercial Operations. "With 8 percent shipment
growth, our gum business remains at the top end of performance of
confectionery, food and the consumer goods industry. All of our regions
contributed to that gain, led by outstanding results in Asia, particularly
China."
In addition to the growth of Wrigley's existing gum and non-gum
confectionery business, the Company continued to make progress on
integrating and properly aligning the acquired brands.
"Our first new offerings under those brands -- including Altoids(C)
Mango Sours and Creme Savers(C) Tropicals -- have now been in the
marketplace six months, and their positive performances have contributed to
excellent acceptance rates for our summer new product offerings that have
been rolling out to U.S. retailers over the past several weeks," commented
Scozzafava. "Next month, we will be unveiling exciting new creative behind
our flagship Altoids brand; and by year end, as the clear leader in mints,
Altoids will introduce the next great innovation to the category --
chocolate-dipped mints -- in time to make it an especially Happy New Year
for our customers and consumers."
Turning to the individual geographic regions, second quarter sales
highlights included:
-- Asia continued to deliver strong sales growth, recording a 26 percent
increase on a 22 percent shipment increase. The biggest contribution
to the region's sales gain came from China, where sales expanded at a
rate in excess of 30 percent. The continued excellent business
momentum in China reflects ongoing positive consumer response to our
innovative bottled gum products and the expansion of China's most
popular confectionery brand following the first quarter launch of
Doublemint(R) mints.
-- In EMEAI (principally Europe), sales were up 7 percent on an 8 percent
shipment increase. Growth in the region was led by double-digit gains
in Russia, Ukraine, the Middle East and India, similar to the first
three months of the year. In Russia, sales of Juicy Fruit(C) Jelly
Chews have achieved nearly a 20 share in the sugar confectionery
category after just six months in the marketplace. Those strong gains
for East/South Europe were partially offset by modest sales declines
across West/North Europe, although both Germany and France had
relatively better sales performances than in the first quarter.
-- Sales in North America were up 28 percent, with the strong majority of
the gains coming from the acquired confectionery brands. In the U.S.,
sales for Wrigley's core business climbed 3 percent on a 4 percent
increase in volume. Strong gains from Orbit(R), Orbit White(R), and
new Doublemint Twins(TM) mints, as well as continued growth in
Extra(R), more than offset declining sales for sugar gum brands;
Eclipse(R) pellet volume also declined, but at a slower rate than in
the previous quarter.
Overall, year-to-date net sales are up 15 percent or $292 million to
$2.3 billion, including a 1 percent negative impact of currency
translation, on a 22 percent shipment increase. Excluding currency effect,
the Company's core business accounted for just under half of both shipment
and sales growth through the first six months of 2006.
Gross Margins
Consolidated gross margins for the quarter were 52.1 percent versus
57.1 percent a year ago. They were reduced by approximately 100 basis
points as a result of restructuring charges and stock option expenses.
Lower margin contributions from the confectionery brands acquired last
summer accounted for another approximately 250 basis points, and the
remaining decline can be principally attributed to some product mix shifts
and geographic mix of business in the quarter, along with lower initial
margins for some new consumption-driving packaging formats overseas. There
were also slightly unfavorable product costs in the quarter, but despite
rising fuel and commodity prices, they were kept to a minimum through other
efficiencies and cost savings.
"Margin improvements remain a key focus for the entire organization,"
stated Reuben Gamoran, Senior Vice President and Chief Financial Officer.
"Our changing mix of business, the success of new product and packaging
formats, and the current geographic sales mix have put some pressure on
margins, and we are redoubling our efforts to manage costs and improve
efficiencies to maintain our strong overall margin position. We have
substantially completed the supply chain integration for Altoids products,
and we expect to see benefits from our streamlined production and
distribution processes. Additionally, we have recently initiated some
changes in our core gum business to further improve operations and overall
cost performance."
The difference between 2006 year-to-date gross margins of 52.0 percent
and the prior year figure of 56.9 percent reflects the same factors noted
for the second quarter.
Operating Profits and Net Earnings
Consolidated operating profits for the quarter and the first six months
of the year were down 7 percent and 8 percent respectively, due to
restructuring charges and stock option expensing. In the absence of those
charges, operating profits were up for the quarter and year-to-date,
including a small positive contribution from the new confectionery brands
in the current quarter.
Consolidated net earnings for the quarter of $141 million were down $22
million from the prior year. On a diluted per share basis, earnings were
$0.51, down 11 percent from the year-ago quarter. In addition to the
dilution from the acquired confectionery brands, earnings were negatively
impacted by the restructuring charge and stock option expenses, which
reduced earnings by $0.02 and $0.03 respectively. On a non-GAAP basis,
excluding restructuring and options costs, earnings per share were $0.56
versus $0.57 a year ago.
Year-to-date diluted earnings per share of $0.91 are down 13 percent
from the first six months of 2005. Excluding restructuring ($0.04) and
options costs ($0.05), six-month earnings per share -- on a non-GAAP basis
-- of $1.00 are down $0.04 from the year-ago period, including a $0.01
negative impact from currency translation.
About Wrigley
The Wm. Wrigley Jr. Company is a recognized leader in confections with
a wide range of product offerings including gum, mints, hard and chewy
candies, and lollipops. The Company has global sales in excess of $4
billion and distributes its world-famous brands in more than 180 countries.
Three of these brands -- Wrigley's Spearmint(R), Juicy Fruit(R), and
Altoids(R) -- have heritages stretching back more than a century. Other
well-loved brands include Doublemint(R), Life Savers(R), Big Red(R),
Boomer(R), Pim Pom(R), Winterfresh(R), Extra(R), Freedent(R), Hubba
Bubba(R), Orbit(R), Excel(R), Creme Savers(R), Eclipse(R), Airwaves(R),
Solano(R), Sugus(R), P.K.(R), and Cool Air(R).
Cautionary Statement Regarding Forward-Looking Information
To the extent that statements contained in this press release may be
considered forward-looking statements, the following will be deemed to be
the Wrigley Company's meaningful cautionary disclosure regarding such
statements. A variety of factors could cause actual results to differ
materially from the anticipated results or expectations expressed. The
important factors that could affect these outcomes are set forth in Exhibit
99 to the Company's Annual Report on Form 10-K for the year ended December
31, 2005.
STATEMENT OF CONSOLIDATED EARNINGS OF
WM. WRIGLEY JR. COMPANY
Three Months Ended Six Months Ended
June 30, June 30,
2006 2005 2006 2005
Net sales $1,206,817 $1,040,184 $2,282,347 $1,990,574
Cost of sales 568,819 445,813 1,077,170 858,570
Restructuring charges 9,193 - 17,763 -
Gross profit 628,805 594,371 1,187,414 1,132,004
Selling, general and
administrative expense 407,862 358,049 793,655 703,475
Operating income 220,943 236,322 393,759 428,529
Interest Expense (16,012) (1,077) (31,355) (2,282)
Other income 1,890 2,932 8,953 5,309
Earnings before income
taxes 206,821 238,177 371,357 431,556
Income taxes 66,183 75,733 118,834 138,098
Net earnings $140,638 162,444 $252,523 293,458
Net earnings per average
share of common stock
(basic)(a) 0.51 0.58 0.91 1.04
Net earnings per average
share of common stock
(diluted)(a) 0.51 0.57 0.91 1.04
Average number of basic
shares outstanding for the
period 277,503 281,413 277,485 281,260
Average number of diluted
shares outstanding for the
period 278,002 282,719 278,410 282,605
(a) Per share calculations based on the average number of shares
outstanding for the period.
Note: In thousands except for earnings per share amounts.
SOURCE Wm. Wrigley Jr. Company
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Related links:
http://www.wrigley.com
CONTACT:
Christopher Perille, Senior Director -
External Relations of Wm. Wrigley Jr. Company, +1-312-645-4077
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