CHICAGO, March 12 /PRNewswire-FirstCall/ -- At its 105th Annual Meeting of Stockholders today, the Wm. Wrigley Jr. Company (NYSE: WWY) confirmed several key accomplishments from 2007. Most notably, the Company said that it had:
-- Surpassed its internal aspiration of achieving $5 billion in sales by
actually delivering $5.4 billion.
-- Produced double-digit earnings growth, achieving its long-term earnings
growth goal for the eighth straight year.
-- Generated record cash flow from operations, exceeding $1 billion for
the first time ever.
Delivering Results in Both Good and Challenging Times
In his remarks, Bill Wrigley, Jr. noted that the Company had delivered strong performance, despite an increasingly challenging global economic environment.
"We believe the hallmark of a great company, and the hallmark of a great long-term investment asset is its ability to deliver strong results not just in the good times, but in the tough times, as well," said Wrigley. Noting that overcoming volatility and adversity have been part of doing business throughout Wrigley's 117-year history, Wrigley pointed out that the Company operated in a growing category, with fundamental characteristics that make the business resilient in tough times. Specifically, he pointed out that confectionery products:
-- meet consumers' functional needs and emotional desires;
-- deliver small moments of delight at a time when people need them most;
-- and are available at prices that are accessible to a growing percentage
of the world's population.
"While no business is recession-proof, these three characteristics do help make ours more recession-resistant," said Wrigley.
Wrigley also pointed out that the Company itself also benefits from several unique assets that allow it to perform well in challenging times, particularly relative to competitors.
"We believe that when the economic momentum turns the other way," said Wrigley, "it ultimately reveals who has a resilient business, the right strategy and the required capability."
Record Sales and Earnings Drive Solid 2007
CFO Reuben Gamoran highlighted the strong performance of 2007 including 6% volume growth and 15% increase in net sales driven principally by overseas marketplaces. Offsetting flat sales results in North America, Asia recorded 20% year-over-year sales growth, EMEAI -- the Company's largest region -- showed a 26% sales gain over the prior year, and sales in Other Geographic Regions climbed 18% from 2006, largely on the strength of Wrigley's Australian business.
Excluding one-time items, earnings per share were up 11% year-over-year, which marks the eighth consecutive year Wrigley has delivered earnings per share growth within the long-term target range of 9% to 11%.
Gamoran also noted the strength of the Company's results and in particular pointed out:
-- a 20 basis point improvement in gross margins as a percentage of net
sales and a 17% increase in gross profit dollars, despite ingredient
cost increases and higher product costs due to innovation;
-- an increased investment of $150 million in brand support, a 21%
increase over the prior year or 80 basis points as a percentage of net
-- a 20 basis point decline in non-advertising operating expenses as a
percentage of sales;
-- ongoing progress with working capital, which -- at 4% of net sales for
the year -- was at the lowest level in over two decades.
"We will continue to investigate and implement manufacturing and sourcing efficiencies, as well as judicious pricing increases as needed, all designed to maintain our strong margins, despite ongoing cost and margin pressures," stated Gamoran. "And we will be looking to leverage the improvement in operating leverage that was particularly evident in the back half of 2007 as we move through 2008."
In 2007, the Company's record cash flow was put to work expanding capacity, strengthening infrastructure, and expanding Wrigley's presence in confectionery, for example, with the acquisition of A. Korkunov, a premier Russian chocolate company.
Cash was also returned to stockholders, Gamoran stated, in the form of over $300 million in dividends and more than $100 million in net stock repurchases. He also noted that the Board of Directors' recent decision to increase the Company's dividend rate by 16% makes 2008 the 27th consecutive year of dividend increases for Wrigley stockholders.
CEO Points to Successes Behind the Numbers and Areas for Additional Improvement
President and CEO Bill Perez began his remarks by highlighting Wrigley's progress against the commitments it had made at the year-ago meeting, before turning to the Company's plans and opportunities in 2008 and beyond.
Reinforcing the achievement of several 2007 commitments, Perez cited the Company's ability to slow the growth of non-advertising operating expenses, increase supply chain productivity even while improving customer service levels, and significantly mitigate the unfavorable impact of price inflation through a combination of strategic sourcing and related cost reduction initiatives -- all of which helped the Company maintain, and even slightly expand, its already strong margins.
Perez also noted the key role innovation played in Wrigley's 2007 success. The Company set the bar higher on delivering innovation with the launch of 5 in the United States -- exceeding not only internal records, but a few industry benchmarks as well. "5's quality, unique packaging, and premium positioning set it up as a big idea with big potential," Perez said. "We're thrilled to have 5 in our portfolio. We have a strong new player that will serve as the standard for great innovations still to come."
Turning to the topic of leveraging acquisitions, Perez offered examples from around the Wrigley world:
-- The A. Korkunov business has exceeded the Company's expectations in
terms of sales and profits, while increasing its leading share of the
boxed chocolate segment in Russia.
-- Sugus, the chewy candy included in the Kraft acquisition, did very well
in 2007, becoming the number one fruity candy in China. Wrigley's
shipments of Sugus climbed 66 percent in 2007, with distribution
expanding to Hong Kong and Vietnam.
-- Life Savers showed strength in 2007, with U.S. retail sales up 16%, but
there remains more to do to build sustainable growth for this
-- Finally, the introduction of Chocolate Dipped Altoids was strongly
incremental to the Altoids Mint business and increased its dollar share
by 2 points, but other parts of the Altoids portfolio -- Gum, Sours and
Smalls -- did not perform well in 2007. Perez added that work is
already underway to further build the franchise, including new
advertising and the rollout of Altoids Creme de Menthe.
Wrigley also delivered on its plan to increase the effectiveness of its investment in brand support, Perez said. Realigning and decentralizing its marketing organization -- putting people closer to consumers and the marketplace -- along with the Company's global consolidation of advertising agencies and increased use of innovative marketing channels, helped optimize efficiencies and moderate expense growth.
In 2007, Wrigley continued to capitalize on its strength in category management and robust sales organization. Pilot programs based on consumer research have delivered high single to double-digit percent gains in front-end sales and profits for key retail partners. "These examples of win-win solutions for our retailers and Wrigley," commented Perez, "are what excellence in category management is all about."
Finally, Perez noted that Wrigley grew its global top-line at a healthy 15% and has strong plans to improve its global share performance in 2008. He held up the outstanding performance of the Wrigley U.K. team as indicative of the Company's ability to rise to the challenge, citing double-digit growth for the gum category and Wrigley's best U.K. sales performance in three years.
Turning to the future, Perez cited seven focus areas for long-term growth in 2008 and beyond:
-- Delivering healthy financial numbers;
-- Identifying cost and service improvements;
-- Bringing meaningful consumer-focused innovations to the marketplace
with speed and excellence;
-- Advancing the acquired Altoids, Life Savers, Sugus and A. Korkunov
-- Investing in brand support and using media that best connects with
-- Emphasizing retail execution by investing in category management and
shopper insight research; and, most importantly,
-- Focusing on the Company's four key geographies -- China, India, Russia
and the U.S.
Noting that the effects of the U.S. trade inventory adjustments are substantially in the past, Perez paused to spotlight strong plans now in place to address and correct marketplace share declines:
-- Revitalizing Wrigley's Traditional Brands and the Extra portfolio with
the introduction of a sleek, 15-stick envelope that will make these
brands more contemporary and give them a great presence on the shelf.
The new packaging is coupled with significant flavor improvements
across both brands.
-- As the fruit-flavored gum segment is growing rapidly, Wrigley will also
launch a new Extra line, called Extra Fruit Sensations, along with
three new Orbit fruit varieties, to ensure that the Company is
leveraging this important category trend.
-- Continuing to build on the phenomenal success of 5 to date, including
its ability to attract and retain the attention of teens, the biggest
consumers of gum on a per capita basis. "Teens love 5," commented
Perez, "and we love winning with teens."
Perez expressed confidence in the plan to restore Wrigley's U.S. growth and anticipates that the impact will be visible in the second half of 2008.
Wrigley also has tremendous opportunities to build consumption of its brands in China, India and Russia, where per capita gum consumption is lower than in the U.S. and Western Europe. In China, Wrigley is the largest confectionery company with more points of distribution than any other consumer packaged goods company in the country. In India, Wrigley is improving its presence in traditional and in growing modern trade channels. In Russia, there is significant opportunity to increase non-gum confections like Juicy Fruit chewy candies and A. Korkunov chocolates.
"We have a remarkable Wrigley team around the world," closed Perez, "and we know that our people -- who helped deliver our $5 billion sales aspiration -- are ready to take us to the next level."
Annual Meeting Business
In the business portion of the annual meeting, stockholders elected John Rau, Richard K. Smucker, and William Wrigley, Jr. to the board of directors for three-year terms, expiring at the 2011 Annual Meeting.
Shareholders also ratified the appointment of Ernst & Young LLP as the Company's independent registered public accounting firm for 2008.
Board of Directors Actions
At the Board of Directors meeting held immediately following the Annual Meeting of Stockholders, the following officers were re-elected:
William Wrigley, Jr. Executive Chairman and Chairman of the Board of
William Perez President and Chief Executive Officer
Reuben Gamoran Senior Vice President and Chief Financial Officer
Peter Hempstead Senior Vice President - Worldwide Strategy and New
Surinder Kumar Senior Vice President and Chief Innovation Officer
Dushan Petrovich Senior Vice President and Chief Administrative
Howard Malovany Senior Vice President, Secretary, and General
Mary Kay Haben Group Vice President and Managing Director - North
Igor Saveliev Group Vice President and Managing Director -
Michael Wong Group Vice President and Managing Director -
Martin Schlatter Vice President and Chief Marketing Officer
John Adams Vice President - Worldwide Supply Chain
Maxim Grishakov Vice President and Managing Director - Russia
Susan Henderson Vice President - Corporate Communications
Carol Knight Vice President - Scientific and Regulatory Affairs
Shaun Mara Vice President and Controller
Patrick Mitchell Vice President - Worldwide Procurement and
Chief Procurement Officer
Jon Orving Vice President - Nordic
Alan Schneider Vice President and Treasurer
Tawfik Sharkasi Vice President and Chief Scientific and Technology
Samson Suen Vice President and Managing Director - China
The Wm. Wrigley Jr. Company is a recognized leader in confections with a wide range of product offerings including gum, mints, hard and chewy candies, lollipops, and chocolate. The Company has global sales of $5.4 billion and distributes its world-famous brands in more than 180 countries. Three of these brands -- Wrigley's Spearmint(R), Juicy Fruit(R), and Altoids(R) -- have heritages stretching back more than a century. Other well-loved brands include Doublemint(R), Life Savers(R), Big Red(R), Boomer(R), Pim Pom(R), Winterfresh(R), Extra(R), Freedent(R), Hubba Bubba(R), Orbit(R), Excel(R), Creme Savers(R), Eclipse(R), Airwaves(R), Solano(R), Sugus(R), P.K.(R), Cool Air(R), and 5(R).
Cautionary Statement Regarding Forward-Looking Information
This press release contains statements which may be considered forward-looking statements within the meaning of the Securities Exchange Act of 1934 and the Securities Act of 1933, including, without limitation, statements regarding operating strategies, future plans, and financial results. Forward-looking statements may be accompanied by words such as "anticipate," "believe," "could," "estimate," "expect," "forecast," "intend," "may," "possible," "predict," "project," or similar words, phrases or expressions. The Company does not undertake any obligation to update the information contained herein, which speaks only as of the date of this press release. A variety of factors could cause actual results to differ materially from the anticipated results or expectations expressed including, without limitation, the availability or retention of retail space; the availability of raw materials; changes in demographics and consumer preferences; changes in foreign currency and market conditions; increased competition and discounting and other competitive actions; underutilization of or inadequate manufacturing capacity and labor stoppages; governmental regulations; labor stoppages; and the outcome of integrating acquired businesses. These factors, and other important factors that could affect these outcomes are set forth in the Company's most recently filed Annual Report on Form 10-K and the Company's other filings with the SEC, in each case under the heading "Forward-Looking Statements" and/or "Risk Factors." Such discussions regarding risk factors and forward-looking statements are incorporated herein by reference.
SOURCE Wm. Wrigley Jr. Company