NEW YORK (AFX) - Moody's Investors Service Inc. downgraded Sara Lee Corp.'s long-term debt ratings Thursday, citing the packaged food maker's declining performance and weaker overall credit metrics.
In February, Chicago-based Sara Lee announced a five-year restructuring plan designed to save its struggling operations. Costs related to the plan were estimated at about $1 billion.
Although Sara Lee has made progress in achieving cost savings, Moody's said, 'the benefits have been more than offset by higher operating costs and heavy competition that have resulted in lower operating margins in key segments.' The company's food service, international bakery and beverages units have particularly been hit hard.
The debt ratings agency dropped Sara Lee's debt rating down a notch to Baa1 from A3, with a continued negative outlook.
Sara Lee shares rose 16 cents to close at $17.16 on the New York Stock Exchange.
Copyright 2006 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.