Sara Lee profit nearly doubles in third quarter

by Eric Schroeder
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DOWNERS GROVE, ILL. ā€” Net profit at Sara Lee nearly doubled in the third quarter ended March 29, climbing 82% to $211 million, equal to 30c per share on the common stock, from $116 million, or 16c per share, in the same period a year ago.

Net sales for the quarter were $3,243 million, up 11% from $2,935 million during the same quarter of the previous year. Sales grew in five of the six business units, with strongest growth in international beverages and international bakery.

"The third-quarter marks the continuation of the strong sales trends that we have seen all year," said Brenda C. Barnes, chairman and chief executive officer. "Iā€™m pleased to report that unit volumes were up in most of our business segments, helped by successful product innovations.

"A variety of external market pressures, including volatile commodity prices, continue to affect the industry. Positively, our business covered the incremental cost of commodities in total. We also continued to take actions designed to improve our profitability, namely the third-quarter exit of our low-profit Mexican meats joint venture and the fourth-quarter right-sizing of our North American workforce."

For the North American Retail Meats segment, operating income for the quarter was $53 million, up 84% from $28 million during the same quarter of the pervious year. The gain reflected the higher exit and transformation costs in the prior-year period. Net sales increased 2% to $590 million compared with $577 million during the previous year.

For the North American Retail Bakery segment operating income was $14 million, up sharply from a loss of $12 million during the same quarter of the previous year. Net sales for the segment were $528 million, up 11% compared with $476 million during the same quarter of the previous year. The increase in sales was driven by higher selling prices to offset increased input costs and by unit volume growth.

In the Foodservice segment, operating income decreased 9% to $35 million compared with $39 million in the same quarter of the previous year. Net sales in the segment were flat at $529 million.

For the International Beverage segment, operating income was up 7% to $129 million compared with $121 million during the pervious year, the result of favorable foreign currency exchange rates and higher unit volumes. Sales in the segment were up 23% to $807 million compared with $658 million during the previous year.

Operating income in the International Bakery segment was up 18% to $17 million compared with $14 million during the same quarter of the previous year. Sales in the segment increased 19% to $231 million from $195 million during the previous year.

For the first nine months of fiscal 2008, Sara Lee posted income of $593 million, or 83c per share, up from $387 million, or 52c per share, in the same period a year ago. Net sales were $9,705 million, up from $8,857 million.

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