Profits down sharply in quarter for Sara Lee Food & Beverage

by Josh Sosland
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CHICAGO — Operating profits of Sara Lee Food & Beverage in the first quarter ended Oct. 1 were $13 million, down 62% from the first quarter last year. Sales were $1.08 billion, up 1%.

Operating profits of the North American Retail Meats business were $17 million, down 29%. Sales were $615 million, up 3%.

Results in meat were adversely affected by restructuring charges and transformation costs. These partly were offset by the effects of higher volumes and lower commodity costs. Sales gains were driven by strong new product performances in the Jimmy Dean, Hillshire Farm and Ball Park brands.

The baking group of Sara Lee sustained an operating loss of $4 million in the quarter, compared with a $9 million profit in the first quarter last year. Sales were $460 million, down 2%.

In addition to the restructuring and transformation costs, the $4 million loss was attributed principally to higher commodity costs. Overall, the North American retail bakery segment showed a unit volume decline in the quarter of 5%. Sharp gains in sales of Sara Lee brand baked foods were offset by declines in its other products.

Net income of Sara Lee Corp. in the first quarter was $67 million, equal to 9c per share on the common stock, down 80% from $352 million, or 45c per share, in the first quarter last year. Net sales were $4,305 million, down 2% from $4,395 million.

Operating income in the quarter was $253 million, down 26%.

Net income was adversely affected by charges related to the company’s transformation plan, business exit costs and accelerated depreciation.

On an operating basis, results were hurt by lower operating segment incomes because of lower sales, higher coffee commodity and energy costs and unit volume softness in Europe.

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