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Diamond Foods Revenues Increase Sharply

Posted on: Saturday, 10 September 2005, 00:00 CDT

Sep. 9--STOCKTON -- Diamond Foods Inc. announced sharply higher revenues for the fourth quarter and fiscal year ended July 31.

Diamond, which converted July 21 to a public company after 93 years of operation as a walnut growers' cooperative, expects to announce complete results for the fourth quarter and fiscal year 2005 the week of Oct. 24. Those results will reflect the accounting practices applied to agricultural cooperatives.

Company officials this week reported net sales for its fiscal fourth quarter increased by 39 percent to $97.7 million compared with $70.2 million for the fourth quarter of 2004.

Net sales for the fiscal year ended July 31 increased by 29 percent to $463.0 million compared with $359.7 million for previous year.

Looking at full-year sales, revenues were up most dramatically in the snack-foods category, reflecting the national launch of the company's Emerald Nuts line. Sales volume more than tripled from year to year, rising to nearly $21.6 million from $7.1 million.

However, Diamond saw its largest dollar-volume gains in its more traditional business lines, particularly in ingredient sales to U.S. commercial bakeries and other processed-food manufacturers and in export sales.

North American ingredient revenues rose to $107 million in fiscal 2005, up more than $36 million, or 51 percent, from the year before. Exports saw a $26.2 million, or 27 percent, year-to-year gain, going up to $122.5 million in the latest fiscal year.

Diamond spokesman Steve DiMattia, quoting the company's current prospectus, said in an e-mail, "North American ingredient sales increased due to increased shipments to the USDA school lunch program and volume increases in the baking and food-service channels as the rising prices of other nuts made walnuts more attractive to these customers."

International sales were boosted by expanded distribution in the German retail market and increased demand from Korean bakeries and candy makers.

Michael J. Mendes, Diamond president and chief executive, predicted continued sales growth over the next five years.

"Our targets are to generate average annual revenue growth in the 8 to 10 percent range and to grow net income by more than 15 percent annually over this five-year period," he said in a statement. "We expect this sales growth to be led by our Emerald snack products, which represented 5 percent of fiscal 2005 net sales and which we expect will grow significantly faster than the overall snack-nut market."

One leading reason Stockton-based Diamond converted to a public company was the ability to raise capital in order to capture a larger share of the snack-food market, where it faces well-heeled competitors such as Kraft Foods, owner of Planters brand nuts, and Frito-Lay.

Diamond shares DMND, which were issued at $17 per share and generally traded between $20.50 and $22 in its first week on the Nasdaq exchange, have more recently hovered at around $20 per share.

The stock closed Thursday at $19.22 per share, down 53 cents from the previous day.

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DMND,

Source: The Record

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