LAKE SUCCESS, N.Y. — Hain Pure Protein Corp., an organic and antibiotic-free meat business owned by the Hain Celestial Group, has faced some challenging times and will be under strategic review by company management.
During a June 22 conference call with securities analysts to discuss the company’s third-quarter results, Irwin D. Simon, chairman, president and chief executive officer of Hain Celestial, did not rule out divestment of the business when asked by an analyst if the business belonged longer term with Hain Celestial.
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| Irwin D. Simon, chairman, president and c.e.o. of Hain Celestial |
“We are going to look at all our businesses, all our categories and evaluate what strategically make sense,” Mr. Simon said. “Listen, the organic category is growing nicely, but this is a different business to manage. So, we are going to look at everything. And is it a long-term business for Hain, I can't answer you now.”
The Hain Pure Protein business unit features fresh and processed chicken and turkey products sold under the Plainville Farms and FreeBird brands. During the first nine months of fiscal 2017, ended March 31, Hain Pure Protein recorded an operating income loss of $31,000, which compared unfavorably to the same period of the previous year when the business unit’s operating income was $31,078,000. Sales during the period rose to $387,412,000 from $379,460,000 the previous year.
Earlier in the call, Mr. Simon said the Hain Pure Protein business remains an important segment for future growth.
“We are an innovator here and a disruptor in the fresh, antibiotic-free and organic poultry category,” he said. “And we expect the organic protein category to grow double digits. We have a great opportunity to leverage our position as one of the largest suppliers in this space.”
Issues affecting the business unit’s performance during the first nine months of fiscal 2017 include disruptions in the start-up of a new processing plant.
“The plant start-up delays we experienced during the first nine months of fiscal 2017 are now behind us,” Mr. Simon said. “We expect strong profitability in Hain Pure Protein as we look ahead to 2018.
“… The protein category, particularly our segment in organic and antibiotic-free, is growing. We expect 2017 net sales of $515 million to $525 million for this segment, followed by low- to mid-single-digit top-line growth in fiscal 2018. We expect profitability in fiscal 2018 to recover back to at least 2016 levels. This will primarily be driven by improvement in growth in our operations. The momentum we started to experience in Q4 of 2017 reinforces our confidence for our recovery in H.P.P. next year.”
Additional challenges facing the business unit may be competition. Some of the industry’s largest processors, including Tyson Foods, Inc., Pilgrim’s Pride Corp., and Perdue Farms, have developed or are in the process of developing organic and antibiotic-free lines of poultry. For example, in April 2016, Pilgrim’s Pride announced plans to covert one of its plants to the process of certified organic chicken. Once up and running, Pilgrim’s Pride management estimated its production will be approximately 20% of the organic chicken production in the United States.
