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International Boost Sweetens Wrigley Sales

Sarina Penn

Wrigley (WWY Quote - Cramer on WWY - Stock Picks) sales popped in the fourth quarter, but not by enough to crack Wall Street earnings targets.

The Chicago-based company, which famously makes chewing gum as well as such products as Altoids and Life Savers, saw a nice boost from overseas sales.

Overall, Wrigley's fourth-quarter profit totaled $155 million, or 56 cents a share, for a dime-a-share leap vs. last year. Revenue got pushed 16.4% higher to a better-than-expected $1.42 billion, primarily due to a 30.9% sales surge in Europe, the Middle East, Africa and India. For the quarter, that segment made up just over half of Wrigley's revenue intake.

The company noted that its takeout of Russian chocolate maker A. Korkunov, which kicked off a little over a year ago when Wrigley signed to take an 80% stake in it, contributed significantly to full-year gains along with "excellent performances" by gum brands Extra and Orbit in Germany and Poland, respectively.

Sales in Asia, another significant market for the company, vaulted 23.2% in the fourth quarter, year over year. Notably, however, North American revenue actually slipped 2.7% year over year as trade-inventory adjustments in the U.S. weighed domestic shipments into a "double-digit" slide. Mitigating this, but not by quite enough, was a double-digit price/mix jump.

Excluding $9.8 million worth of gains on asset sales and a nominal restructuring benefit, Wrigley pocketed a fourth-quarter profit of $145.1 million, or 52 cents a share, which misses Thomson Financial's analyst consensus by 2 cents a share.

For the full year, earnings came to $621.5 million, or $2.24 a share, excluding items, on "record" revenue of $5.39 billion. Analysts had sought income of $2.23 a share on a top line of $5.34 billion.

A huge chunk of its 2007 bottom-line growth was due to currency-translation gains, said Wrigley, "much of which was reinvested in the business, especially in brand support."

As for full-year sales, executive chairman Bill Wrigley, Jr., noted that breaching the $5 billion threshold "represents the achievement of an ambitious aspiration we had set for ourselves several years ago." He also said that the "diversification of our brand portfolio and confectionary capabilities," which among other initiatives helped contribute to that growth, "have us well-positioned to continue capturing opportunities in global confectionary."

Moreover, the company upped its dividend by 16% to 33.5 cents a share for the three-month period beginning May 1, and authorized another $800 million for stock buybacks. The new share-repurchase program will start as soon as Wrigley finishes off its current authorization, under which roughly $254 million is left.

Still, Wrigley shares were recently falling 75 cents, or 1.3%, to $57.11.