Sara Lee’s 3Q Profit Nearly Triples
DOWNERS GROVE, Ill. – Food and household products maker Sara Lee Corp. said Thursday its third-quarter profit nearly tripled on revenue growth in its international beverage, bakery, household and body care segments.
The company, which makes Jimmy Dean sausage and frozen cheesecakes, said net income rose to $116 million, or 16 cents per share, from $42 million, or 6 cents per share, a year ago. Income from continuing operations totaled 15 cents in the latest period, up from 10 cents last year.
Sales from continuing operations grew 9 percent to $3.01 billion from $2.75 billion in the prior-year quarter. International beverage sales climbed 17.5 percent, household and body care sales rose 14 percent and international bakery sales increased 11 percent.
Analysts surveyed by Thomson Financial were looking for profit of 13 cents per share on revenue of $2.9 billion.
Media advertising and promotion spending increased 28 percent in the third quarter, driven by significantly higher marketing spending at North American retail meats, international beverage, and household and body care units.
Chairman and CEO Brenda Barnes attributed the sales growth partly to new product launches in numerous brands, including Sara Lee, Jimmy Dean, Hillshire Farm, Senseo, Sanex and Ambi Pur.
"We feel we’ve actually reached and passed a turning point" in the company’s makeover, Barnes said on a conference call. "The third quarter and the first nine months marked clear improvements in all of our business segments compared to last year."
JP Morgan analyst Pablo Zuanic said in a report to investors that while Sara Lee’s bottom line was better than expected, "the net picture is mixed." He cited higher profit margins from the company’s international and North American foodservice units but lower margins from North American retail and no volume growth.
For the first nine months of its fiscal year, net income was $387 million, or 52 cents per share, down from $547 million, or 71 cents per share, a year earlier. Net sales rose 6.9 percent to $9.1 billion from $8.5 billion.
Shares in the company fell 7 cents to $17.02 in late morning trading.
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