US: Sara Lee Q1 income up; lowers guidance
Sara Lee, the US food giant, posted a 15% increase in net income for the first quarter on price increases and the sale of its tobacco business.
For the period ended 27 September, the consumer packaged-goods company reported net income of US$230m, up from $200m in the previous year.
Net sales for the first quarter reached $3.3bn, a 9.6% increase over the comparable period last year. The strong growth was primarily driven by price increases to help offset higher input costs, favourable foreign currency exchange rates and strong unit volumes in the North American retail and fresh bakery segments.
Sara Lee said that it now expects full-year earnings per share to fall in a range of $0.99 to $1.06. This is down on previous EPS guidance of $1.12-$1.20 for the year.
Operating income from continuing operations also dropped to $1.15bn - $1.19bn for the full year, down $104m from the previous year.
"During the first quarter, we saw strong performance in our North American business segments, particularly in North American retail and fresh bakery, building on a strong fourth quarter and driven by outstanding execution over the summer," said Brenda Barnes, chairman and chief executive officer of Sara Lee.
"Both businesses achieved increases in unit volumes, net sales and operating income, and experienced market share gains across virtually every major brand in each major category. Our North American foodservice business did a terrific job increasing sales and profits in a very challenging market."
Sara Lee reported operating income of $353m for the first quarter of fiscal 2009, compared to $293m in the prior year's period, an increase of 20.5%.
The company's North American Fresh Bakery division posted a net sales increase of 17.1% to reach $571m. Gains were driven by higher prices, which offset increased input costs, and by unit volume growth.
Due to the current nature of the financial markets, the company said it has suspended its share buyback programme until "economic conditions improve".
Sara Lee has found itself facing a crisis of confidence after lowering its full-year outlook and flip-flopping on whether or not to suspend its share buyback programme. With worries over its internati...
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