Dive Brief:
- WhiteWave Foods reported a 14% increase in reported and constant currency net sales to $1.05 billion, over $924 million last year, in its second-quarter earnings results announced Tuesday.
- Acquisitions continue to comprise a solid portion of that growth, but organic constant currency net sales also increased 7%, driven by strong growth in the Americas and Europe segments.
- The company's reported diluted earnings per share increased 38% to $0.29 per share, and reported operating income rose 31% to $101 million for the quarter.
Dive Insight:
This will be one of the last earnings reports WhiteWave issues itself before Danone officially acquires the company. The deal is expected to close by the end of the year, pending approval from WhiteWave shareholders. While WhiteWave offers Danone revenue growth opportunities and a solid entrance into plant-based and premium dairy, WhiteWave's growth has noticeably slowed compared to previous quarters, which suggests even WhiteWave is not immune to the challenges facing the dairy industry.
WhiteWave continues to post double-digit sales growth, including a 14% increase the first quarter and 12.8% in Q4 2015. And while acquisitive growth has been key for WhiteWave, the company has also maintained high-single digit sales growth for its internal portfolio, signaling strong demand for WhiteWave's stock of plant-based and premium products.
In this most recent quarter, WhiteWave's plant-based foods and beverages segment posted a 25% net sales increase, with mid-single digit growth for its organic sales and the Vega acquisition as the primary driver. However, that growth was slower than the segment's 29% sales increase in the first quarter and 26% jump in the fourth quarter.
WhiteWave's premium dairy segment also posted double-digit growth that was slower than other recent quarters: an 11% increase in net sales compared to 16% in Q1 2016 and 22% in Q4 2015. This quarter's sales growth was primarily due to Wallaby's contribution, as organic sales increased by low-single digits.
The fresh foods segment continued its decline with a 2% dip in net sales, compared to flat sales last quarter. However, it was a smaller decrease than the 5% net sales decline reported for the segment in 2015, which the company attributed to SAP software complications. This quarter, WhiteWave said the platform’s frozen products saw strong growth. But tight organic salad supplies couldn't meet demand, and the company continues to rebuild distribution from the SAP software-related disruptions.
WhiteWave isn't the only company struggling with supply-and-demand issues for organic produce. USDA reported last month that demand for organic foods and beverages among U.S. consumers has officially exceeded the country's supply of organic ingredients.
But if anything, this could be good problem to have because it means WhiteWave's portfolio of packaged salads and value-added produce is in line with consumer demands. Once WhiteWave — or eventually, Danone — corrects supply chain issues, the fresh foods segment may return to growth in upcoming quarters.