Sara Lee (SLE) improved its fourth-quarter earnings on new products and higher prices that propelled meat and foodservice revenues as it continued to shed bakery assets in its ongoing effort to split into two separate companies.
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The Downers Grove, Ill.-based maker of branded packaged meat, bakery and beverage products under brands such as Jimmy Dean, Hillshire Farm and Senseo, posted operating income of $76 million, or 8 cents a share.
The results were higher compared with $64 million, or 16 cents a share, in the same quarter last year. Excluding special items, the company would have earned $189 million, or 20 cents a share, matching average analyst estimates polled by Thomson Reuters.
Revenue for the three-month period was $2.27 billion, up 8% from $2.1 billion a year ago, beating the Streets view of $2.22 billion. Sales were led by new products from Jimmy Dean and Hillshire Farm as well as continued growth from Ball Park Franks and stronger prices.
Partially offsetting any gains was higher commodity cost increases and lower margin promotional programs.
As part of its efforts to split into two separate companies and concentrate more fully on its meat products, Sara Lee has been quickly shedding bakery assets.
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During the last six months, we have made significant strides toward creating two pure-play companies which are poised for success, said Sara Lee executive chairman Jan Bennink. Our objective of building two simpler, faster and more entrepreneurial businesses is being realized.
The company, which announced earlier this week the $545 million sale of its North American refrigerated dough business to Ralcorp (RAH), said it continues to streamline operations as it progresses toward the spin off, slated to close later this year.
Sara Lee sold its North American fresh bakery unit to Grupo Bimbo and is readying for a close on that deal before the end of September. The company continues to look for bidders for its Spanish bakery and French refrigerated dough businesses and said its Australian frozen desserts business remains under strategic review.
Because of the spin off that has downsized corporate resourced and reduced overhead, Sara Lee identified cost reduction opportunities of $180 million to $200 million to be realized in fiscal 2012 and 2013.
Offsetting the savings will be significant charges related to the sale of about $425 million, most made of restructuring and transaction-related costs.