UPDATE 2-Lance Q4 EPS tops Street; sees 2009 rev above estimates

Wed Feb 11, 2009 12:27pm EST

* Q4 EPS, rev beat market view

* Gives FY 2009 rev outlook above market view

* Says 2009 EPS to be hurt by acquisition, higher advt spend

* Sees '09 gross margins 40-41 pct

* Shares rise 13 pct (Adds background, details from conference call, analyst comments) By Mihir Dalal

BANGALORE Feb 11 (Reuters) - Snack-food maker Lance Inc (LNCE.O) posted a better-than-expected fourth-quarter profit, helped by higher selling prices, and it forecast 2009 revenue above market expectations, sending its shares up 13 percent.

"I would be surprised if the company can hold the price increases through 2009 given the economic environment," Morgan Keegan analyst Benjamin Brownlow said by phone.

The company, which makes the Toastchee, Thunder and Captain's Wafers brands of snacks, increased the prices of its products at the end of the third quarter to battle high input prices. However, commodity prices have fallen since then.

"It (commodity costs) had risen significantly in the third quarter and levelled out into the fourth," Chief Executive David Singer said in a conference call with analysts.

Looking ahead, the company expects net sales for the full year 2009 to be $900 million to $920 million. Analysts were expecting $897.2 million, according to Reuters Estimates.

The company said its 2009 earnings will be hurt by the integration of Archway Cookies LLC and greater advertising spend.

Lance, which purchased substantially all of the assets of Archway Cookies for about $30 million in December, forecast 2009 earnings of $1.00 to $1.15 a share. Analysts expected $1.12 a share.

"We were expecting that there could be a potential upside (to the earnings view) given the magnitude of the fall in commodity prices. It's a bit conservative, but it is justified to be conservative in this economic environment," said Brownlow, who has a "market perform" rating on Lance's stock.

Lance expects gross margins of 40 percent to 41 percent in 2009, Chief Financial Officer Rick Puckett said in the call.

For the fourth quarter, Lance reported a profit of 24 cents a share compared with 3 cents last year.

Excluding items, it earned 28 cents a share. Analysts were looking for 23 cents.

Shares of the Charlotte, North Carolina-based company rose more than 8 percent to $20.41 in midday trade Wednesday on Nasdaq. They touched a high of $21.27 earlier. For alerts please double-click [ID:nWNAB1210] (Editing by Jarshad Kakkrakandy and Deepak Kannan)

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