Lifeway Foods 1Q sales up, but profits decline

Lifeway Foods Inc. of Morton Grove reported a 13 percent increase in sales for the first quarter of 2012 primarily on continued strong sales of its kefir-based products, but rising distribution and raw material costs held down profits.

First quarter gross sales were $21.6 million, compared to $19.0 million for the first quarter of 2011. The company said sales of its flagship product, Kefir, as well as ProBugs Organic Kefir for kids and BioKefir, have grown as awareness of the products have increased.

In addition, Lifeway's Frozen Kefir line, which was launched in April 2011, contributed approximately $700,000 to sales during the first quarter of 2012.

“We are pleased with our first quarter financial performance, despite the cost headwinds we experienced in the quarter, and believe our sales strong sales momentum will continue in 2012,” said Julie Smolyansky, CEO of Lifeway Foods.  “This year, we expect increased distribution of our kefir products with our retail partners.   Our recent expansion with Target exhibits the growing healthy living trend, consumers' demand for nutritious products, and retailers increasingly expanding their product offerings to support consumer demand.”

Total consolidated net sales increased 12 percent to $19.4 million during the three-month period, up from $17.3 million during the same three-month period in 2011.

Gross profit for the first quarter decreased 11 percent to $6.8 million, compared to $9.7 million during the same period last year, which the company said was due to a 30 percent increase in freight expense and higher fuel costs during the first quarter, as well as a 20 percent increase in the cost of conventional and organic milk, the company's largest raw material.

Total operating expenses increased 13 percent to $4.9 million during the first quarter, down from $4.3 million during the same period in 2011.