Coolbrands' first-quarter profit melts

Profits at CoolBrands International Inc. were nearly sliced in half during the first quarter, with revenues at the frozen treats maker chilled by higher competition and lower fees for the delivery of Dreyer's ice cream.

The Globe and Mail
January 17, 2005

Coolbrands' first-quarter profit melts
Increased competition to blame, CEO says
Canadian Press

TORONTO — Profits at CoolBrands International Inc. were nearly sliced in half during the first quarter, with revenues at the frozen treats maker chilled by higher competition and lower fees for the delivery of Dreyer's ice cream.

Toronto-based CoolBrands reported late Friday that its earnings for the three-month period ended Nov. 30 — the first quarter of fiscal 2005 — fell to $2.6-million (U.S.) or 5 cents a share. That was down from $5-million or 9 cents in the same period the previous year.

Quarterly revenue slipped 3.3 per cent to $100.5-million from $103.9-million.

CoolBrands sells ice cream and other frozen products under the Eskimo Pie, Chipwich, Tropicana, Welch's, Yoplait and Welch's banners. While sales of prepackaged consumer products increased in the quarter, fees paid by Dreyer's for CoolBrands delivery of its ice cream fell by $9-million to $2.5-million in the fiscal first quarter.

Profits also dropped on lower margins generated by subsidiary Americana Foods' manufacturing and Eskimo Pie Frozen Distribution Inc.'s distribution operations, CoolBrands said in a statement.

"As we expected, increased competition impacted our revenues and net earnings in this first quarter," CoolBrands president and co-CEO David Stein stated.

He said the company is "implementing an aggressive program of new brand introductions and product innovation and increased promotional support for our brands.

"We are also expanding the categories in which we compete, reflected in our recently announced agreement to acquire the Breyer's and Creme Savers yogurt business from Kraft," Mr. Stein said, referring to a $59-million deal for the Kraft business announced in December.

CoolBrands plans to provide more details on its first-quarter results in a conference call scheduled for tomorrow.

The company's results were released after stock markets had closed. In Friday trading, its shares gained 11 cents (Canadian) to close at $8.86 on the Toronto Stock Exchange.


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