US food and consumer goods giant Sara Lee has said its quarterly net income rose 40%, but added that challenging market conditions would continue into the fourth quarter.
The company reported net income of US$376m, or 47 cents per share, for the third quarter to 27 March, compared to $269m, or 33 cents per share, in the year-earlier quarter.
Net sales were $4.7bn, up 9% compared to $4.4bn in the prior year’s third quarter. Sara Lee said that during the third quarter, sales had benefited from organic growth in all five lines of business: meats, bakery, beverage, household products and branded apparel, and favourable foreign currency exchange rates, particularly the strong euro.
“We are pleased to have achieved sales growth during the third quarter in all of Sara Lee’s five lines of business. Our strategy of concentrating our marketing investment and new product development behind our Strategic Investment brands, such as Senseo, Hillshire Farm and Sara Lee, is beginning to bear fruit,” said C. Steven McMillan, chairman, president and chief executive officer of Sara Lee.
“Our cash flow for the first nine months of the year reached a record $1.4bn, as our dedication to aggressive cost management and selective investment continues to increase the cash productivity of our business. These efforts will continue in the fourth quarter as we also look forward to the results from a number of new product introductions across Sara Lee’s lines of business that will build on the momentum of the successful launches this year,” McMillan added.
The company said it expects fourth-quarter earnings per share of between 41 and 45 cents, while full-year earnings per share are expected to be in a range of $1.56 to $1.60, compared to $1.50 in fiscal 2003.
Sara Lee said it expects the challenging market conditions that affected operations in the third quarter, including higher raw material costs, to continue into the fourth quarter of this year. For the full year however, the company expects its meats, bakery, beverage and household products divisions to show good gains in operating segment income, driven by higher sales from new product activity, select price increases to cover higher raw material costs and an improved economic and retail environment.