Bob Evans Farms has reported a jump in first-quarter profits from its food manufacturing arm thanks to falling costs offsetting lower sales.

For the three months ended 24 July, the US food maker and restaurant group said its BEF Foods manufacturing division generated operating income of US$15.9m, up from $3m a year earlier.

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A drop in sow costs improved production yields and an increased sales mix of retail items combined to offset a fall in net sales, which dropped from $86.2m a year ago to $83m. Net sales were hit by an increase in trade spending and a decline in foodservice volume.

Overall, Bob Evans Farmes reported net income of $4.3m, compared to a loss of $1m. Operating income rose from $64,000 to $8.3m due to an impairment charged booked in the corresponding quarter a year earlier.

However, sales for the group fell to $321.7m from $326.3m.

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Nevertheless, the company raised its fiscal 2016 earnings per share guidance on the back of its earnings performance. It now expects EPS to come in at $1.85 to $2.00, from $1.75 to $1.95. Consolidated net sales are expected to be between $1.33bn and $1.39bn and for BEF Foods, sales of between $373m to $383m are expected.

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"We remain focused on executing our turnaround plans and improving operating efficiencies where we now expect to achieve $17 million of cost savings in fiscal 2016, an additional $3m over our prior estimate. However, our guidance remains cautious as a result of commodity headwinds associated with avian influenza, continued efforts to reduce restaurant discounts while growing transactions, and general economic conditions, including volatility in financial markets," said CFO Mark Hood.

Meanwhile, the company said its board had authorised the pursuit of a $200m sale-leaseback transaction for a select number of its restaurant properties.