Sara Lee Bakery income climbs in 2011

by Eric Schroeder
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DOWNERS GROVE, ILL. — The North American Fresh Bakery Division of Sara Lee Corp., which was reported as a discontinued operation following the agreement to sell the business to Grupo Bimbo S.A.B. de C.V., posted operating income of $66 million in the fiscal year ended July 2, up 59% from income of $41 million in fiscal 2010. Adjusted operating income, meanwhile, was $83 million, up 45% from $57 million a year ago. Net sales within North American Fresh Bakery fell 4% during the year to $2,037 million.

For the fourth quarter ended July 2, operating income was $40 million, up sharply from $8 million in fiscal 2010, while sales fell 8% to $543 million from $587 million in the same period a year ago.

Also reported as discontinued operations during the year was the North American refrigerated dough store brands business, which Sara Lee on Aug. 9 agreed to sell to St. Louis-based Ralcorp Holdings, Inc. in a transaction valued at $545 million. The sale is expected to close by the end of calendar 2011.

Sara Lee said operating income for North American Refrigerated Dough was $42 million in fiscal 2011, down 25% from $56 million in fiscal 2010. Adjusted operating income for the business was $42 million, down 23% from $54 million in fiscal 2010. Net sales during the year were $307 million, down 6% from $326 million.

For the fourth quarter ended July 2, operating income in the segment was $4 million, down 36% from $7 million in the same period a year ago. Sales fell 8% to $63 million.

Sara Lee said it sustained a loss of $12 million in its International Bakery business during fiscal 2011, which compared with a loss of $14 million in fiscal 2010. Net sales for the segment fell 8% to $726 million from $785 million. During the fourth quarter ended July 2 the segment recorded a loss of $28 million, which compared with a loss of $18 million in the same period a year ago. Net sales eased 1% to $182 million from $184 million.

In August, Sara Lee announced its intent to divest the Spanish bakery and French refrigerated dough business. A sale process is under way and numerous bids have been received, Sara Lee said. The businesses will be reclassified as discontinued operations in the first quarter of fiscal 2012.

Overall, divestments and restructuring as well as lower corporate expenses led to a spike in income during the year at Sara Lee Corp. For the full year ended July 2, the company had income of $1,287 million, equal to $2.07 per share on the common stock, up 154% from $506 million, or 74c per share, during fiscal 2010. Sales for the year were $8,681 million, up 4% from $8,339 million during the previous year.

For the fourth quarter ended July 2, the company as a whole had income of $111 million, or 19c per share, up 41% from $187 million, or 28c per share, during the same quarter of the previous year. Sales for the quarter were $2,297 million, up 9% from $2,113 million.

“During the last six months, we have made significant strides toward creating two pure-play companies which are poised for success,” said Jan Bennink, executive chairman at Sara Lee. “Our objective of building two simpler, faster and more entrepreneurial businesses is being realized. We have defined the organizational 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. 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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