Sara Lee earnings jump 10c per share in quarter

by Jeff Gelski
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DOWNERS GROVE, ILL. — Sara Lee Corp. saw improved business performance across all of its segments for the fourth consecutive quarter and reported net income of $116 million, or 16c per share, for the third quarter ended March 31, the company said Thursday. The net income compared with $42 million, or 6c per share, in the previous year’s third quarter.

Third-quarter net sales increased more than 9% to $3 billion from $2.8 billion. Net sales grew in all six business segments.

"We delivered outstanding sales growth this quarter on the strength of new product launches by a number of our key brands around the world, including Sara Lee, Jimmy Dean, Hillshire Farm, Senseo, Sanex and Ambi Pur," said Brenda C. Barnes, chairman and chief executive officer of Sara Lee.

Sara Lee expects full year fiscal 2007 earnings per share to be in the range of 60c to 66c per share. Earnings per share for the first nine months were 52c per share, which compared with 71c in the previous year’s first nine months. Sales for the first nine months of the fiscal year rose nearly 7% to $9.1 billion.

In the North American retail meats segment, third-quarter operating segment income dropped to $31 million from $50 million, primarily because of the year-over-year impact of significant items, higher commodity and labor costs, and higher spending behind the Jimmy Dean and Hillshire Farm brands. Net sales in the North American retail meats segment rose more than 6% to $645 million in the third quarter, primarily driven by unit volume growth and a positive sales mix.

North American retail bakery reported an operating segment loss of $12 million in the third quarter, which compared with a loss of $6 million in the previous year’s third quarter. Transformation charges and higher market prices for commodities and other inputs primarily drove the profit decline. Pricing actions and the impact of the Butter-Krust acquisition partially offset the profit decline. North American retail bakery posted more than a 6% increase in third-quarter net sales to $476 million, primarily driven by the addition of the Butter-Krust baking business, higher pricing to cover increased wheat costs and a positive sales mix.

In Sara Lee Foodservice, third-quarter operating income increased 42% to $39 million from $28 million. Higher prices to offset commodity cost increases and savings from procurement and other continuous improvement initiatives drove the profit increase. Net sales rose 1.4% to $529 million.

In international beverage, operating income dropped 5% to $121 million. Net sales rose 17.5% to $658 million. In international bakery, operating income rose a little more than 2% to $14 million from $13 million. Net sales rose more than 11% to $195 million.

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