Sara Lee today (5 May) cut its annual profit target as the US food maker admitted sales volumes could be hit by price increases and said its international bakery unit was being affected by “intense” competition.
The company, which also announced it was mulling its options over its international bakery division and its refrigerated dough business in North America, said it now expects full-year adjusted earnings per share from continuing operations to reach US$0.79 to $0.83 – down six cents from its previous guidance.
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Sara Lee also said its full-year diluted earnings per share from continuing operations was now expected to hit $0.67-0.71 – compared to the forecast of $0.75-0.79 it gave in February.
The company posted third-quarter net income of $153m, against a loss of $336m filed last year due to one-off items.
However, Sara Lee’s reported operating income from continuing operations fell 5.3% to $213m. Adjusted operating income, which excludes factors including M&A and disposals and foreign exchange, from continuing operations decreased 11%.
Reported net sales increased 7% to $2.22bn but, on an adjusted basis, they fell 6%.
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By GlobalDataCEO Marcel Smits said Sara Lee was “committed” to covering commodity cost increases through higher prices, while building the company’s brands through “superior marketing and innovation”.
“We remain committed to this approach despite some short-term volume risk,” Smits said. “Mainly due to this volume risk in our core businesses, as well as intense competition in our international bakery segment, we are reducing our guidance by six cents. That said, we are optimistic about the long term prospects of our businesses.”
Meanwhile, Sara Lee also today announced the acquisition of North American “premium” meats business Aidells Sausage Co. for $87m.
