MGPI suffers from lack of interest in low-carb
low-carb products has led it to reduce its fiscal earnings guidance
for the year.
The company adjusted its fiscal 2005 earnings guidance to a range of $0.40 to $0.50 per share; its previously issued guidance ranged from earnings of $1.03 to $1.08 per share.
"Growth opportunities for our specialty ingredients generally are healthy and continue to show promise over the long-term," said Ladd Seaberg, chief executive officer.
"However, sales of our specialty ingredients related primarily to low-carb food applications remain substantially below the peak levels achieved in the fourth quarter of fiscal 2004," he said, adding that demand for low-carb produts is unlikely to pick up this year.
Mike Trautschold, executive vice president of marketing and sales, said that the slow-down first started to make itself known in mid-summer.
"At that time, it was unclear if this was a temporary lag due to rapid inventory growth of these products at both the retail and food processor level, or if it was a permanent leveling of demand," he said. The company noted that it had now conluded that the downturn is here to stay, at least until the end of 2004.
As well as adjusting the earnings guidance, the company noted that it also possibly faced a partial or complete write-down of inventories that were built in anticipation of sustained strong demand and have factored this scenario into its revised guidance range.
Away from this rather gloomy news, Seaberg tried to focus attention on the company's alcohol markets which "continue to be favorable due to strong demand and pricing for both food grade and fuel grade alcohol," Seaberg said. "Our distillery products segment should contribute positively to our earnings performance in fiscal 2005, assuming demand remains high and corn prices stay at the current lower levels compared to the prior year."
Shares of the Atchison, Kansas-based company, which produces food ingredients derived from wheat, closed down 23.7 percent at $7.48 after the announcement, having earlier touched a low of $7.45.
