US food group Sara Lee has revealed it is looking to expand in emerging markets like Russia and Brazil but insisted it has set “a high bar” when considering acquisitions.
The company is in the process of selling its home and body-care businesses and plans to use the bulk of the fund to buy back shares. The group yesterday (16 February) announced a US$3bn programme to buy back shares.
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“The board of directors will continue to evaluate the best opportunities for value creation, and investment of our cash, through potential acquisitions or other investments in the company’s growth,” chairman and CEO Brenda Barnes said.
“However, at this time, the board has increased our share repurchase programme to $3bn to support our intention to begin aggressively repurchasing shares in the near future.”
Speaking to analysts at the CAGNY conference in Florida yesterday, Barnes said Sara Lee will continue to consider opportunities that will “deliver increased value” to the company, which may include expansion in “high-growth developing markets”.
Barnes said: “We will expand in high-growth, developing markets, such as Russia and Brazil. But one thing I hope we have demonstrated is the discipline that we don’t want to add things in that don’t make sense. We just got rid of channels we are trying to clean up and focus our portfolio.”
She added: “We have big core businesses that we feel are really fertile for more growth opportunities…and if we find something to add to them, then we’ll certainly take a look at it. We’ll be very disciplined and make sure that it has value creation if we did buy anything.”
Marcel Smits, Sara Lee’s CFO, told analysts that the firm is “setting a high bar” for acquisitions.
“We believe that investing in our own stock is a very attractive opportunity. We have good business momentum. We are guiding for a substantial profit increase for 2010 and we feel confident that we can deliver.”
Earlier this month, Sara Lee lifted its target for annual earnings after one-off items and improved second-quarter volumes boosted half-year profits.
The firm said it now expects full-year 2010 adjusted earnings per share to be in the range of $1.00 to $1.05 a share – compared to its previous target of $0.91 to $1.05 a share.
