Hillshire adjusted operating income eases in year

by Eric Schroeder
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DOWNERS GROVE, ILL. — The Hillshire Brands Co., the former Sara Lee Corp., said adjusted operating segment income totaled $396 million in the year ended June 30, down 4% from $414 million in fiscal 2011. Hillshire, which became an independent company earlier this summer, did not report earnings for the fourth quarter or full year, due to the need to restate historical results to reflect accounting irregularities and discontinued operations.

Total adjusted net sales at Hillshire in the full year were $4,039 million, up 4% from $3,884 million in the same period a year ago.

“Our team delivered solid results in the face of a difficult operating environment,” said Sean Connolly, chief executive officer of Hillshire Brands. “We are just beginning to see the impact of our plan to strengthen our core business and expand into adjacencies. Our volumes have stabilized and performance across our key brands has improved. With our senior leadership team now largely in place, our entire organization is focused on driving growth and innovation while continuing to manage costs.”

He added, “As we’ve said previously, fiscal 2013 will be a transition year as we continue to drive execution of our three-year plan. We are committed to taking the necessary actions to deliver strong and sustainable shareholder returns. Looking forward, the launch of our new advertising beginning in the first quarter, followed by the introduction of new and improved products and packaging later in the year are important steps in supporting our objectives.”

The company has slightly modified the composition of two of its segments. Results from the Aidells and Gallo business, previously reported in the Foodservice & Specialty Meats segment, now are reported in the Retail segment. Aidells was acquired in May 2011. Hogs, commodity pork and turkey results for the year and Senseo results for the first nine months of fiscal 2012, previously reported in the Retail segment, now are reported in Foodservice/Other. The company exited the Senseo business at the end of the third quarter 2012.

Adjusted operating segment income in the Retail division totaled $313 million in fiscal 2012, down 0.6% from $314 million in fiscal 2011. Adjusted net sales, meanwhile, rose nearly 5% to $2,884 million from $2,760 million.

Adjusted operating income in the Foodservice/Other segment totaled $79 million in fiscal 2012, down 22% from $102 million, while sales increased 2% to $1,025 million from $1,001 million.

Within the Australian Bakery segment, adjusted operating income was $4 million, which compared with a loss of $2 million. Sales were $136 million, up narrowly from $135 million.

Overall, for the fourth quarter ended June 30, adjusted operating segment income was $100 million, down 3% from $102 million in the same period a year ago. Total adjusted net sales increased 3% to $1,016 million from $984 million.

For fiscal 2013, Hillshire has forecast adjusted earnings of $1.40 to $1.55 per share.

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