August 12, 2011


New products aid Sara Lee's Q4 sales



Sara lee Corp. reported that its North American Retail segment reported a 4% increase in adjusted net sales to US$715 million for Q4, which is primarily driven by pricing actions.


The segment reported strong new product performance with growth from Jimmy Dean Jimmy D's and Hearty Crumbles, and Hillshire Farm Low Sodium and Family Size.


Ball Park maintained its share leadership behind the successful launch of New York Deli Style Beef Franks. These introductions were more than offset by the negative volume impact from early pricing actions taken to offset commodity cost increases and the rationalisation of lower margin promotional programmes. Mix was marginally positive. On a reported basis, net sales declined 2% largely due to last year's 53rd week.


Adjusted operating margins improved by 590 basis points over the prior year's fourth quarter, increasing to 11.4%. Reported operating margin for the quarter was 10.1%. For the second straight quarter, commodity cost increases were recovered through cost savings initiatives and pricing actions. The net commodity recovery along with lower MAP spending (versus significant investment in the fourth quarter of last year) and a reduction in SG&A expense drove an adjusted operating segment income increase of US$44 million versus last year. Reported operating segment income increased US$32 million.


The implementation of SAP across all meat plants is now complete and is expected to generate efficiencies and cost savings in fiscal 2012.


In the North American Foodservice segment, adjusted net sales for the quarter increased 9% to US$400 million, driven largely by pricing actions taken across the portfolio. This marks the second straight quarter of strong top-line growth in the segment. Reported net sales grew by 2.1%. Segment volumes were down as declines in roast and ground coffee and diversified bakery more than offset volume growth in meats, frozen bakery and liquid coffee. The segment posted particularly strong results for Jimmy Dean breakfast sausages, pre-sliced pies and cakes and branded meats distributed through convenience stores.


During the last six months, Sara Lee has made significant strides toward creating two pure-play companies poised for success, said Jan Bennink, executive chairman. "Our objective of building two simpler, faster and more entrepreneurial businesses is being realised," Bennink said. "We have defined the organisational framework for our new companies and are continuing to build and restructure our teams for the future.


"Through our strategic divestments, we are achieving our objective of streamlining the portfolios to provide the best foundation for strong and focused businesses moving forward. We are heartened by the fact that we have been able to deliver solid results for fiscal 2011 while managing difficult commodity conditions and the internal challenges of the spin off," Bennink added. "The inherent strength of these two businesses, combined with a new focus and orientation, give me confidence that the two companies will be highly successful when they separate in the first half of calendar 2012." 

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