Menu Foods Income Fund recently reported a second-quarter net loss as sales dropped 44 percent after customers canceled orders. The company is still feeling the aftermath from their massive pet food recalls.
Since their recalls in March, customers accounting for at least 16 percent of revenue stopped orders with Menu Foods.
Menu Foods also announced that it will be selling a production facility in South Dakota to Mars, Inc, one of their major customers. Mars no longer wants Menu to produce its Royal Canin and Nutro brands of pet food. The sale of the facility will go for $26.3 million. The company said that the proceeds will go to pay debt.
The company has also resumed shipments of “cuts and gravy” style pet food to most private label clients, including its two largest customers, who had suspended orders in the wake of the recalls. Menu Foods said that customers are starting to produce more pet food supplies again.
“This is a firm indication that our customers are refilling their pipelines, and while we do not expect sales to continue at this level, the rebuilding of inventory by our customers is the next logical step in reestablishing our business,” Menu Foods said in a press release.
Another pet food company affected by the recalls, Procter & Gamble, posted a slightly better-than-expected quarterly sales growth last Friday, but two of their high-end product lines are still weak after recent safety issues.
The company’s snacks, coffee and pet care segment reported the lowest growth of any division of the company. Sales are just up 2 percent to $1.1 billion as pet food sales continue to fall.
Procter & Gamble says that their pet food business is still in recovery mode after the pet food recalls which included Iams and Eukanuba wet pet food products.
The company says that they are focusing their efforts on marketing to pet consumers to try new cat and dog food products from their brands such as Iams Healthy Naturals dry dog food.
In related recall news, a spokesperson for Procter & Gamble recently said that the company is individually addressing customer concerns from the pet food recalls.
Source: Reuters, Wall Street Journal, Bloomberg