Sara Lee: first quarter earnings fall 40 percent

Chicago / IL. (sl) Sara Lee Corporation, maker of EarthGrains breads and Jimmy Dean breakfast sandwiches, reported a lower quarterly profit as the company was hit by rising costs for wheat and other ingredients. But higher spending on marketing and new products, as well as price increases, helped lift sales, even before the boost from the weaker US-Dollar on overseas sales was factored in.

The company said profit was 200 million USD, or 0,28 USD a share, in its fiscal first quarter that ended September 29, compared with 333 million USD, or 0,44 USD a share, a year earlier. First quarter results include 0,18 USD a share from a contingency payment related to tobacco operations the company sold in fiscal year 1999, which the company had previously posted.

Results in the year-earlier quarter include a tobacco payment of 0,16 USD a share, as well as a 0,21 USD a share tax benefit and 0,02 USD a share gain on the disposition of discontinued operations, among other items. Sales rose 8,3 percent to 3,13 billion USD. Excluding the impact of the weaker US-Dollar, acquisitions and divestitures, sales rose 4,5 percent. Units shipped rose one percent.

Sara Lee has been raising prices to offset soaring costs, while also spending more on marketing and new products to boost sales. The company is also about a year past a major overhaul that saw several businesses sold or spun off. For all of fiscal 2008, Sara Lee said it now expects earnings of 1,00 to 1,06 USD a share, including the tobacco payment. In August, the company forecast 0,95 USD to 1,01 USD a share. The change is due to higher-than-expected foreign currency rates, the company said.
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