Sara Lee: Q2/2008 boosted by strong bakery sales

Chicago / IL. (sl) Sara Lee Corporation announced that net sales for the second quarter of fiscal 2008, ending December 29, 2007, were 3,5 billion USD, an increase of 9,7 percent compared to 3,2 billion USD in the prior year period. Net sales grew in all six business segments, with particularly strong growth in international beverage (+21,7 percent), international bakery (+17,6 percent), household and body care (+14,3 percent) and North American retail bakery (+9,2 percent). The corporation´s adjusted net sales – which exclude the impact of foreign currency exchange rates and acquisitions/divestitures – increased 4,2 percent in the second quarter of fiscal 2008, also with growth across all six business segments, most notably in North American retail bakery (+9,2 percent), international beverage (+7,7 percent) and international bakery (+4,3 percent). For the first six months of fiscal 2008, Sara Lee reported net sales of 6,6 billion USD, up 9,0 percent over the comparable period last year, while adjusted net sales rose 4,3 percent.

North American Retail Bakery (including Senseo coffee)

  • Net sales increased 9,2 percent to 547 million USD in the second quarter of fiscal 2008, primarily driven by higher selling prices to offset increases in input costs and unit volume growth; adjusted net sales also increased 9,2 percent.
  • Net sales for the first six months increased 6,6 percent to 1,1 billion USD; adjusted net sales also rose 6,6 percent.
  • Operating segment income was seven million USD in the second quarter, compared to three million USD in the year ago period. The improvement was driven by lower transformation-related expenses and a reduction in MAP spending. Higher prices and savings from procurement and other continuous improvement initiatives were offset by increases in the cost of commodities and SG+A. Adjusted operating segment income was seven million USD, compared to eight million USD in the prior year.
  • Operating segment income for the first six months was 15 million USD, compared to eight million USD in the first six months of the prior year. Adjusted operating segment income was 16 million USD, compared to 18 million USD in the first six months of fiscal 2007.

Excluding acquisitions, unit volumes increased 2,8 percent in the second quarter, driven by growth in the branded fresh and frozen bakery businesses and Senseo single-serve coffee. During the second quarter, the Sara Lee brand maintained its position as the No. 1 fresh bakery brand in America with a 7,8 percent share, and the bakery business increased or maintained market share in five of its seven bakery categories, according to IRI share data (twelve weeks ending December 16, 2007). Unit volumes were flat for the first six months.

Foodservice

  • Net sales increased 1,7 percent to 625 million USD in the second quarter of fiscal 2008, driven by higher prices and a favorable sales mix; adjusted net sales increased 1,6 percent.
  • Net sales for the first six months decreased 0,4 percent to 1,1 billion USD; adjusted net sales declined 0,6 percent.
  • Operating segment income decreased 5,2 percent to 56 million USD in the second quarter, as higher prices and savings from procurement and other continuous improvement initiatives were more than offset by increases in commodities, inflation and other input costs. Adjusted operating segment income declined 8,0 percent to 56 million USD.
  • Operating segment income for the first six months decreased 1,8 percent to 77 million USD, while adjusted operating segment income declined 9,0 percent.

Unit volumes, excluding acquisitions, decreased 3,1 percent in the second quarter and 5,7 percent for the first six months, as double-digit growth in Douwe Egberts One-Touch liquid coffee concentrates was more than offset by the planned exit of certain low-margin meats and sauces and dressing products, and lower unit volumes in traditional roast and ground coffee.

International Bakery

  • Net sales increased 17,6 percent to 234 million USD in the second quarter of fiscal 2008, primarily due to favorable foreign currency exchange rates, price increases to cover higher input costs and higher unit volumes; adjusted net sales rose 4,3 percent.
  • Net sales for the first six months increased 13,9 percent to 455 million USD; while adjusted net sales increased 3,0 percent.
  • Operating segment income was nine million USD in the second quarter, compared to four million USD in the year-ago period with the increase primarily due to favorable foreign currency exchange rates, procurement and other continuous improvement savings, lower transformation costs and higher prices to cover increasing commodity costs. Adjusted operating segment income was 14 million USD, compared to 15 million USD in the year-ago period.
  • Operating segment income for the first six months was 22 million USD, compared to 18 million USD for the year-ago period. Adjusted operating segment income for the first six months of 30 million USD was unchanged compared to the prior year´s period.

Unit volumes, excluding acquisitions, increased 1,6 percent in the second quarter, driven by growth in the Spanish fresh bakery business and the European refrigerated dough business, which was partially offset by a unit volume decline in the Australian bakery business, the latter primarily due to lower private label ice cream volume. Consumers in Spain voted Bimbo Tender Crust bread «Product of the Year 2007», a highly regarded award in the consumer goods category. Unit volumes increased 1,7 percent in the first six months.

Info: The detailed press release «Sara Lee Reports Strong Sales Growth in Second Quarter of FY08» (19 pages|330 KB) is available as PDF document.

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