American Italian Pasta Co., the nation's largest maker of dry pasta, said Tuesday that its fourth-quarter earnings more than doubled despite an 8 percent drop in sales.
Company officials also said they expected the struggling economy to keep pasta sales high for the rest of the year and well into 2010.
"The jobless recovery will continue to challenge consumers' food budgets and pasta is a perfect solution," Chief Executive Officer Jack Kelly told analysts in a conference call.
The Kansas City-based company reported earning $15.8 million, or 73 cents per share, for the July-September period. By comparison, the company earned $7.3 million, or 36 cents per share, during the same period a year ago.
Revenue during the quarter declined from $162 million to $149 million.
Analysts surveyed by Thomson Reuters had expected profits of 68 cents per share on $153.2 million in revenue.
The company said retail sales declined 3 percent as a 7.7 percent decrease in average selling prices offset a 4.5 percent increase in volume. Sales in institutional channels, including restaurants and other food manufacturers, fell 23 percent from a combination of a 17 percent drop in prices and a 6 percent decrease in volume.
Kelly said some of the decline in volume was intentional as the company switches more focus to higher-margin retail sales, which have grown to represent more than 80 percent of all revenue.
American Italian Pasta officials also said the volume decline reflected government contracts favoring smaller companies, the economy's impact on some of its food service customers and cheaper manufacturing agreements.
For the year, the company said it earned $88.3 million, or $4.10 per share, compared with earning $19.1 million, or 99 cents per share, during 2008.
Annual revenue rose 10 percent from $569 million to $628 million as overall volume sales increased 6 percent.
Analysts had expected annual earnings of $2.85 per share on $630.6 million in sales.
The year-ago period included $18 million in professional fees to handle the restatement of securities filings for several years, the result of an internal investigation into accounting irregularities that eventually led to criminal charges against several former executives. The 2008 numbers also reflected a $3.7 million impairment charge to some of the company's brands.
While Kelly didn't provide estimates for the 2010 fiscal year, he said the company expected sales to remain strong and that profit margins could be further strengthened by recent declines in the cost of durum wheat.
American Italian Pasta shares were up $1.85, or 6.2 percent, to $31.40 in midday trading Tuesday.