The Hain Celestial Group, Inc
. (HAIN - Free Report
) is progressing well with its Project Terra, which is likely to improve productivity and facilitate cost reductions, thereby strengthening the company’s financial position.
The project was announced in fiscal 2016, with the intention of generating worldwide cost savings worth $350 million through fiscal 2020 (comprising annual productivity). In doing so, the company intends to optimize plants, co-packers and procurement along with rationalizing product portfolio. Earlier, the project categorized the company’s core brands into five strategic platforms in its U.S. segment — Fresh Living, Better-for-You Baby, Better-for-You Snacking, Better-for-You Pantry and Pure Personal Care. This move is projected to accelerate sales and margin growth.
Out of $100 million targeted for fiscal 2018, the company has already attained cost savings of $63 million (including Hain Pure Protein) and expects savings of roughly $90-$115 million in fiscal 2019. Consequently, it plans to reinvest the additional savings in brand development and household penetration.
The company has actively pursued strategic acquisitions to gain market share and expand its base. Now, it plans to expand in India, Middle East and China. In this regard, one of its wholly-owned subsidiaries acquired Clarks UK Ltd., the leading maple syrup and a natural sweetener brand in the United Kingdom. Other notable buyouts include Tilda Limited, a renowned name in Basmati rice, and Rudi's Organic Bakery, one of the leading organic and gluten-free company. Hain Celestial also acquired some leading packaged grocery brands – Hartley's, Gale's Robertson's, Frank Cooper's and Sun-Pat – from Premier Foods plc. The company also acquired Ella's Kitchen Group Limited that offers organic baby food products under approximately 80 brands.
The company is witnessing soft sales in its U.S. segment for the last two quarters. Sales have been partly affected by SKU rationalization efforts. Though the company is making efforts to return its U.S. business to growth, it is likely to take some time. Additionally, escalated freight and commodity expenses along with high SG&A costs may weigh on the company’s margins. Management expects the above-mentioned headwinds to prevail in fiscal 2019.
In fact, the company projects net sales growth in the range of flat to slightly down for the first quarter of fiscal 2019. Moreover, both adjusted EBITDA and the bottom line are anticipated to fall year over year at a rate similar to that in the fourth quarter of fiscal 2018.
Such downsides have led this Zacks Rank #3 (Hold) company to plunge 35.3% in the past six months, underperforming the industry
’s decline of 3%.
Looking for Better Food Stocks? Check These
Danone (DANOY - Free Report
) has a long-term earnings growth rate of 8.15% and a Zacks Rank #2 (Buy).
The Chef’s Warehouse, Inc. (CHEF - Free Report
) has a long-term earnings growth rate of 22% and a Zacks Rank #2.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.