DOWNERS GROVE (dpa-AFX) - Processed and packaged foods company Sara Lee Corp. (SLE) reported Thursday a loss for the third quarter compared to profit last year, despite sales growth, hurt by charges and significantly lower operating margins.
Both adjusted earnings per share from continuing operations and quarterly revenues missed analysts' expectations. Sara Lee also adjusted its guidance within the earnings and revenue forecast ranges previously announced by the company for the full-year 2012.
'I am pleased to report that Meat Co showed continued improvement in volume trends, achieved SG&A reductions and launched new innovation in the third quarter. The Coffee & Tea business performed well in its main markets with underlying margin improvement, and is gearing up for significant innovation,' CEO Marcel Smits said in a statement.
The Downers Grove, Illinois-based maker of Jimmy Dean sausages and Ball Park franks, which is splitting into two publicly traded companies, reported a net loss of $2 million or breakeven per share for the third quarter, compared to net income of $153 million or $0.25 per share in the prior-year quarter.
Excluding items, adjusted earnings from continuing operations for the quarter declined to $121 million or$0.20 per share from last year's $132 million or$0.22 per share.
On average, 11 analysts polled by Thomson Reuters expected the company to report earnings of $0.25 per share for the third quarter. Analysts' estimates typically exclude special items.
Net sales from continuing operations for the quarter grew 2.0 percent to $1.90 billion, and adjusted net sales increased 3.0 percent to $1.86 billion from the same quarter last year. Ten Wall Street analysts had a consensus revenue estimate of $1.95 billion for the quarter.
Coffee & Tea adjusted revenues grew 4.6 percent to $929 million from last year, and meat adjusted revenues increased 1.3 percent from a year ago to $906 million.
The company also noted that it is on track to spin-off the Coffee & Tea business into an independent company by June 30.
'Positively, after two years of steep commodity cost increases, we finally see a stabilization and, in the case of coffee, a reversal of raw material trends. For the first time in two years, both businesses recovered their commodity cost increases and will see further benefits in Q4, particularly in coffee,' Smits added.
In the third quarter, price increases of $123 million helped to offset total commodity cost increases of $92 million.
Operating margin for the quarter contracted 690 basis points to 3.5 percent, and adjusted operating margin edged down 80 basis points to 10.5 percent from last year.
Looking ahead to fiscal 2012, the company now expects adjusted earnings to fall in the middle of the $0.89 to $0.95 per share range, with net sales projected to be at the low end of the prior guidance range of $7.9 billion to $8.15 billion.
Street is currently looking for full-year 2012 earnings of $0.92 per share, on annual revenues of $8.08 billion.
The company also said it will pay a $3.00 special dividend after the spin-off of the shares of its U.S. subsidiary that holds its Coffee & Tea business. The U.S. subsidiary will pay the dividend to Sara Lee shareholders who receive shares of the spun-off business.
In Thursday's regular trading session, SLE is currently trading at $22.06, down $0.26 or 1.19% on a volume of 8.77 million shares.
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© 2012 AFX News
