Hain Celestial's profits jump despite cost pressure

The food and personal care company posted sales of $276.2m for the quarter supported by price increases and the strong performance of its Jason and Avalon brands. Growth in operating profit was also high rising 17.4 percent to $29.2m but margins remained almost unchanged. ​Price inflation ​ The company endured significantly higher input costs as commodity and energy prices jumped contributing to a 22.9 percent increase in cost of sales to $197m. Consequently, Hain Celestial increased the prices of many of its finished products to offset higher input prices and ensure margins remained stable. Cosmetic companies are often unwilling to pass on rising input prices to consumers because of the highly competitive state of the market but the strength of the natural and organic sector gives more room for firms to maneuver. "Our price increases were widely accepted across our customer base due in a large part to effective trade and promotional spending,"​ said Hain Celestial's CEO Irwin Simon. The company is also looking to offset price inflation by improving productivity. Hain Celestial claimed that its focus on cost saving and the integration of the back office functions of its acquired businesses has already begun to bear fruit. Indicative of this was the fact that the company's selling, general and administrative expenses as a percentage of sales fell to 18.1 percent form 19.2 percent last year. ​​Looking ahead ​ With regards to the rest of the year Simon added: "We continue to invest in our business by consolidating our operations in the United Kingdom and in personal care, positioning the company for additional expansion and remaining focused on improving efficiencies throughout our business."​ Guidance for the fiscal year 2008 remains unchanged with sales expected to be between $1.025bn and $1.050bn.