DOWNERS GROVE (dpa-AFX) - Processed and packaged foods company Sara Lee Corp. (SLE), Thursday reported a sharply lower second-quarter profit due to reduced income from discontinued operations, pared margin, and one-time charges.
Nonetheless, Sara Lee, which is spinning-off into two public companies, said both adjusted earnings and revenues improved from last year. The company also reaffirmed its outlook for the full year 2012. Sara Lee shares are up 4 percent in afternoon trade on the New York Stock Exchange. Sara Lee's net income for the second quarter dropped to $469 million or $0.79 per share from $833 million or $1.30 per share last year. Earnings from continuing operations for the quarter slid to $33 million or $0.05 per share from $88 million or $0.14 per share a year ago. Excluding items, adjusted earnings from continuing operations for the quarter was $158 million or $0.27 per share, up from $134 million or $0.21 per share last year. On average, 11 analysts polled by Thomson Reuters expected earnings of $0.25 per share for the quarter. Analysts' estimates typically exclude special items. Chief Executive Marcel Smits said, 'The meat business showed a marked improvement in volume and mix trends in the quarter in response to course corrections. We made brisk improvement on the meat categories in the retail and foodservice businesses, while the bakery categories lagged...' Downers Grove, Illinois-based Sara Lee said net sales from continuing operations for the quarter grew 6.3 percent to $2.08 billion from $1.96 billion last year. Adjusted sales were up 5.8 percent to $2.04 billion from $1.93 billion last year. Eleven Street analysts expected revenues of $2.14 billion for the quarter. Coffee & Tea revenues grew 11 percent from last year, and adjusted revenues were up 11.6 percent. Sara Lee said growth was due to pricing and mix, partly offset by lower volume due to shut down of its business in flood-hit Thailand and the withdrawal from private label business in France. Meat revenues rose a modest 2.3 percent from last year, and adjusted revenues edged up 0.9 percent. Selective pricing actions helped reverse volume declines in key categories. Sara Lee's operating margin for the quarter deteriorated to 4.9 percent from 9 percent last year, while adjusted margin improved to 12.5 percent from 11.2 percent. For fiscal year 2012, Sara Lee continues to expect adjusted earnings of $0.89 to $0.95 per share, and revenue of $7.9 billion to $8.15 billion. Street analysts currently expect earnings of $0.92 per share and revenues of $8.19 billion for 2012. Sara Lee said it was on track to spin-off of its international Coffee & Tea business. The company said it expects to declare and pay its $3.00 special dividend in the fourth quarter 2012. SLE is trading at $19.84, up $0.82 or 4.31%, on a volume of over 7 million shares on the NYSE.
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