Posting results for its second quarter, Sara Lee revealed that impairment charges totalling US$152m, transformation costs and charges associated with disposals swung the group to a loss for the period. Sara Lee reported a loss of $62m, or $0.08 per share, compared with an income of $438m, or $0.57 per share, reported for the comparable period of last year.
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In January, the company revealed that it would record a $40m pretax charge when it cut 500 jobs as part of its ongoing restructuring plan. The company also said it would recognise a non-cash, pretax goodwill impairment of $152m.
Sara Lee plans to cut 1,700 jobs as part of a reorganisation plan designed to boost profitability.
Revenues rose 7% to $3,18bn during the quarter, up from $2.97bn for the comparable period of last year. Sara Lee reported across the board sales growth in all six of its business units. The company’s North American retail bakery unit posted a sales increase of 8%, thanks to the addition of Butter-Krust and price hikes. Breakfast product launches and a good performance from the Jimmy Dean brand boosted sales of North American retail meats by 2%. International bakery sales rose 5%
“The underlying operating results for Sara Lee continue to show solid top- and bottom-line improvements, building on the strong foundation that we created with our transformation and the successes that we’ve achieved in recent quarters,” said Brenda C. Barnes, chairman and chief executive officer.
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By GlobalData“The improvements in the base business are driven by our relentless focus on answering consumer needs, the introduction of highly innovative and successful new products to the market, and our strong customer relationships and superior trade capabilities,” she continued.
Looking ahead, Sara Lee forecasts earnings for the full year of $0.58-$0.64 a share, including $0.08 a share from discontinued operations, a loss of $0.30 per share related to other significant items, a gain of $0.21 cents a share for a tax benefit and a gain of $0.16 a share from the sale of its tobacco business.
The company expects fiscal year sales to increase 5-6% year on year.
Sara Lee shares dropped 2.3% on the New York Stock Exchange at time of press, declining to $16.97.
