DOWNERS GROVE, ILL. — In announcing first-quarter earnings, Sara Lee Corp. said it was taking a $371 million impairment charge relating to the company’s Spanish and French bakery business. It was the second charge taken against the business in recent years.
The impairment charge was the largest factor in the company’s loss of $181 million in the quarter ended Oct. 1. The charge dwarfs proceeds Sara Lee stands to collect for the business.
In October, Grupo Bimbo S.A.B. de C.V. agreed to purchase the Sara Lee fresh bakery business in Spain and Portugal for about €115 million ($154 million). The operations have annual sales of about $400 million.
The impairment charges brings to nearly three quarters of a billion dollars the write-offs Sara Lee has taken against the business in Europe. In 2008, Sara Lee took a $400 million charge after a review led to a cut in the fair value assigned to goodwill and intangible assets not subject to amortization.
In the Sara Lee earnings report, the International Bakery division was renamed the Australia Bakery segment, since the European business has been moved to discontinued operations.
The Australian Bakery segment had operating income of $2 million in the first quarter, unchanged from the same period last year. Sales were $38 million, up 5% from the same quarter last year. The company said adjusted sales were $38 million, down 9%.
Sara Lee did not detail results of the company’s North American Fresh Bakery business during the quarter. Sale of the business to Grupo Bimbo was expected to close imminently.