North American business boost Sara Lee earnings

by Keith Nunes
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DOWNERS GROVE, ILL. — Sara Lee’s North American business units, primarily its processed meats and food service operations, boosted earnings for the company during the first quarter of fiscal 2010. Net income for the quarter ended Sept. 26 was $284 million, equal to 41c per share on the common stock, up from $230 million, or 33c per share, during the same period of fiscal 2009.

Sales for the quarter were $2,588 million, down from $2,794 million a year ago.

“I’m very pleased with our first-quarter performance, which demonstrates substantial bottom-line improvement,” said Brenda C. Barnes, chairman and chief executive officer. “A number of factors contributed to our results, including lower input costs, Project Accelerate cost savings and pricing discipline. At the same time, we’re increasing or maintaining our market share positions in many of our key categories behind important new products such as Hillshire Farm Family Size lunchmeat tubs, Jimmy Dean D-Lights breakfast sandwiches and various new Senseo coffee pods in our international markets.”

As a result of the company’s first-quarter performance, Ms. Barnes said Sara Lee was increasing its earnings per share guidance for the full year to a range of $1.12 to $1.18 per share, up from $1.03 to $1.09 per share.

Operating income for Sara Lee’s North American Retail business, which includes its processed meats brands, was $83 million for the quarter compared with $54 million during the previous year. The increase was primarily the result of lower input costs, favorable sales mix, growth of the Jimmy Dean brand, improvement in supply chain performance and Project Accelerate, and continuous improvement savings.

Sara Lee’s North American Foodservice division operating income increased $13 million compared with the first quarter of fiscal 2009 to $38 million. Lower commodity costs and efforts to improve business unit efficiencies were the reasons for the operating income increase.

Operating income for the North American Fresh Bakery business declined to $14 million during the quarter. The decline was due to a $7 million charge for partial withdrawal liabilities related to a pension plan, according to the company.

The company’s International Beverage and International Bakery divisions had operating incomes of $123 million and $6 million, respectively. Both results were down compared to the previous year.

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