US consumer goods conglomerate Sara Lee suffered a sharp decline in its share price after cutting its annual profits forecast.
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The upset over the accounting discrepancies at Royal Ahold’s U.S. Foodservice division, a large customer of Sara Lee, has negatively impacted sales. Fourth quarter profit, for the three months ending in June, will be significantly reduced. Shares dropped almost 10% on the news.
“We have too large a part of our portfolio in businesses that are in rather significant decline,” Sara Lee’s chief executive, C. Steven McMillan, said on a conference call with investors. “We have been overly exposed to U.S. Foodservice as they slowed down.”
Bloomberg News reported that Sara Lee will begin looking more closely at its five main businesses on Monday to weed out products, brands and even units that it sees as not being central.
Third-quarter net income increased to U$269m, or 33 cents a share, from $257m, or 31 cents a year ago. Sales rose 3.6%, to $4.35bn from $4.2bn.
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