Foodservice Equipment Reports Fortnightly
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Welcome to FER Fortnightly Online Newsletter
August 31, 2004








Industry Report:
Sponsored by: Vollrath Co.

CNL To Acquire U.S. Restaurant Properties
Libbey To Move California Production To China
Double Check Your New York Show Plans
Book It! Seattle’s Best Coffee Pairs With Borders
If It’s November, It Must Be MAECO

Regulatory Report:
Sponsored by: ES3

New Connecticut Code Hits Old Refrigeration
Galvanized Hoods Get Reprieve In Pennsylvania
FDA Food Code Marches On
Colorado Equipment Petitions Broaden Your Options
Baltimore County Mandates Food Safety Training
New Fax Law Faces Challenge



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In This Section:
Public E&S Companies Report Strong First Halves
Special Focus: Are E&S Sales Beginning to Stall?
U.S. Second-Quarter GDP Growth Revised Downward
Consumer Sentiment, Expectations Off Only Slightly In August
While International Forecasts Rise Slightly, Concerns Abound


This issue's Industry Report
Sponsor: Vollrath Co. |  Regulatory ReportSponsor: ES3


Economic ReportSponsored by Atlas Metal Industries Inc.

Public E&S Companies Report Strong First Halves
Getting a good, solid read on a fragmented, tightly held industry like foodservice equipment and supplies can be tricky, but here’s as good an indicator as you’ll find: Ten large publicly held E&S companies posted a nearly double-digit aggregate revenue gain in the first half of 2004, according to an exclusive analysis of public company performance by John Muldowney of Clarity Marketing.

Including acquisitions, the 10 companies posted 9.5% higher revenues in the first half of 2004 than in same-period ’03. The 10 companies’ combined first-half revenues total more than $1.4 billion. Profits and margins also grew.

Equipment company growth ranged from 41.7% to flat. Five of the six companies tracked showed growth. As a group, equipment companies grew 9.4% in the first half and 10.3% in the second quarter.

Supplies companies posted gains ranging from nearly 30% to less than one percent. The total gain for the first half was 9.9% with a second-quarter gain of 8.8%.

Significant acquisitions by Standex and Carlisle skew the numbers up by about two points, but even without the special gains, the group recorded the strongest performance in more than four years.

For complete details, including individual company performance, contact Muldowney at jmuldowney@claritymarketing.com.



Section sponsored by Atlas Metal Industries Inc..

Special Focus: Are E&S Sales Beginning to Stall?
(Analysis by FER Publisher Robin Ashton.) [full story]



Section sponsored by Atlas Metal Industries Inc.

U.S. Second-Quarter GDP Growth Revised Downward
The general economy grew even more slowly in the second quarter of 2004 than originally estimated, according to revised data release Friday by the U.S. Commerce Department. The estimate for second-quarter real gross domestic product was revised down to 2.8% from the original estimate of 3.0%. Other indicators, including consumer spending and business investment, were revised slightly upward. First-quarter GDP growth was estimated at 4.5%.

While the downward revision was widely expected, and in fact exceeded some forecasts, the data do indicate a more pronounced slowdown than most economists originally predicted in overall economic growth, including critical consumer spending. Poor job growth and a fairly dramatic slowdown in the growth of corporate profits has some analysts suggesting that the third and fourth quarters of ’04 may see slower growth than forecast just a few months ago. The consensus of Blue Chip Economic Indicators economists in the Aug. 10 edition was for growth of 4.0% in the third quarter and 4.1% in the fourth. Some economists that are part of the consensus are now suggesting growth may be closer to 3.5% for both quarters.

July job growth numbers are scheduled for release on Friday, and will be closely watched—not just by the Presidential contenders, but by consumers and economists, too—for signs of a third-quarter rebound.

The general economic slowdown apparently did not affect sales of foodservice equipment and supplies. Quarterly sales data from most public companies and anecdotal reports from others indicate the E&S market was quite robust April through June. (See related story.)



Section sponsored by Atlas Metal Industries Inc..

Consumer Sentiment, Expectations Off Only Slightly In August
The widely followed confidence and expectations indices maintained by the University of Michigan’s Surveys of Consumers dropped very slightly in August, it was announced Friday. But Director of Surveys Richard Curtin characterized the attitude of consumers as "resilient," given a spate of negative economic news. "Despite higher gas prices, sluggish job growth, and rising interest rates, consumer confidence has remained largely unchanged during the past three months," he said.

The Index of Consumer Sentiment stood at 95.9 in August, down minimally from 96.7 in July and above June’s 95.6 reading. The Expectations Index, a component of the government’s Index of Leading Indicators, fell to 88.2 in August, down from 91.2 in July and 88.5 in June. Both indices are approximately 7% higher than a year ago and are at historically high levels.

Consumer confidence is generally a strong indicator of consumers’ use of restaurants.



Section sponsored by Atlas Metal Industries Inc..

While International Forecasts Rise Slightly, Concerns Abound
GDP forecasts for many major economies worldwide have been creeping higher in recent months, as forecast by Blue Chip Economic Indicators economists. But concerns about the impact of higher oil prices and the slowing of the American economy have some observers warning the uptick may stall.

Pacific Rim economies such as Japan, Taiwan, Korea and Singapore are seeing much stronger growth in 2004 than last year. After more than two decades of stagnation, Japan’s GDP is forecast to grow 4.2% this year, following growth of 2.5% last year and -0.3% in ’02. Big factors in the upturn are growth in both consumer spending, moribund for years, and exports to booming China, which is forecast to grow of 8.7% this year. Singapore’s GDP growth is forecast at 6.6% versus 1.1% last year. Taiwan’s ’04 growth is slated at 5.4% versus 3.2% in ’03. But all these economies import much of their oil and are being hit hard by the increased prices. And while shipments to China offset to some extent the exporting countries’dependence on exports to the United States., the American slowdown does hurt.

Some European economies are also seeing stronger growth than forecast. The ’04 forecast for the U.K. was raised to 3.3% from 3.2% in the Blue Chip August forecasts, and France and Belgium’s GDPs are now each forecast to grow 2.2%, up from 2.0%. But Germany’s economy, the largest in Europe, remains mired in structural problems and is forecast to grow only 1.6% this year. All the European economies, save Britain and Norway, are highly dependent on imported oil. The sharp increases could temper growth forecasts in coming months.



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