* Company cuts full-year profit forecast
* Weak Q3 private label results continue in Q4
* Executive, who oversaw pvt label deal, resigns
* To shut one plant, cut jobs at another
* Shares drop as much as 21 pct (Adds details on executive departures, CEO and analyst comment)
Nov 3 (Reuters) - TreeHouse Foods Inc cut its full-year profit forecast due to weak results at its newly acquired private label business and announced the departure of an executive who had a key role in making the company the largest U.S. private label food maker.
TreeHouse, whose shares tumbled as much as 21 percent on Thursday, boosted its private label business when it closed the $2.7 billion-acquisition of ConAgra Foods Inc’s private label in February.
The results at the business fell short of TreeHouse’s expectations in the third quarter and sales in the current quarter would not be enough to stem the declines, Chief Executive Officer Sam Reed said in a statement.
The company - which also owns brands such as Bay Valley Foods and Flag Stone Foods - cut its full-year adjusted earnings forecast to $2.80-$2.85 per share from $3.00-$3.10, pinning the blame squarely on the underperforming private label business.
TreeHouse also said President Christopher Silva would leave. The departure, which comes three month after Chief Financial Officer Dennis Riordan said he would quit, will leave the company without the two key executives that helped orchestrate and implement the ConAgra deal.
“We are disturbed by the departure of Chris Silva, the #2 executive of the company, following last quarter’s announcement of the retirement of CFO Dennis Riordan,” SunTrust Robinson Humphrey analyst William Chappell Jr. wrote in a note.
TreeHouse said Riordan would replace Silva as president on an interim basis and appointed Matthew Foulston, a Compass Minerals International Inc executive, as its chief financial officer.
ConAgra itself had struggled to make a profit from the private label business that was plagued by integration costs, customer service problems and low profit margins due to price concessions.
TreeHouse’s forecast signals that company executives were not conservative enough in their previous estimate and/or the private brands business was even more damaged than they realized, Chappell said. He cut his rating on the stock to “hold” from “buy”.
The company also said it would close a manufacturing plant in Delta, British Columbia and cut 100 of the 160 jobs at a plant in Battle Creek, Michigan - both of which it acquired as part of the ConAgra deal.
The Oak Brook, Illinois-based company also reported lower-than-expected profit and sales for the third quarter ended Sept. 30.
“The third quarter was a tale of two cities,” CEO Reed said. “Our legacy business continued to perform well ... while the Private Brands business showed sequential improvement, its results fell short of our expectations.” (Reporting by Gayathree Ganesan in Bengaluru; Editing by Maju Samuel and Savio D’Souza)