Lancaster Colony drops final automotive plant

Jun 12, 2008 (The Columbus Dispatch - McClatchy-Tribune Information Services via COMTEX) -- LANC | Quote | Chart | News | PowerRating -- Lancaster Colony Corp. shed its final automotive asset yesterday, selling its Des Moines, Iowa, auto accessory plant.

The $27.5 million sale, to members of the plant's management, is the latest step in the company's plan to focus on its food business.

"Similar to several other actions that we have taken over the last 15 months, this divestiture is consistent with our objective to concentrate our future effort and investment in the food sector," said a statement from John B. Gerlach Jr., Lancaster's chairman and chief executive.

The Des Moines plant, acquired in 1986 when Lancaster bought a truck accessory company, had sales of $145 million in the 2006-07 fiscal year. The factory produced running boards, tool boxes and other accessories.

Earle Brown, a Lancaster spokesman, said the sale is significant because the Des Moines plant was a strong performer.

"This aluminum accessory business was the brightest star in that segment," he said.

Lancaster expects the sale to result in a pretax loss of $20 million to $22 million, which indicates that the plant was sold for less than its value.

The sale price is adequate for Lancaster, considering the sorry state of the automotive industry, said Mitchell Pinheiro, an analyst with Janney Montgomery Scott, a financial-services firm in Philadelphia. "Maybe they even did slightly better than could be expected in the current environment," he said.

Lancaster, based in Columbus, had $1.1 billion in sales and $46 million in profits in 2006-07. It has reduced its nonfood assets so it can focus on products such as salad dressings and frozen breads.

Last year, the company sold a floor-mat manufacturing operation in Coshocton, a truck accessory plant in Wapakoneta and a glassware plant in Lancaster.

The only nonfood product left under the Lancaster umbrella is a candle business.

dgearino@dispatch.com

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