Sara Lee sales down, but profits boosted by cost-cutting
at its bakery division by 36 per cent over 2005 but sales were down
on the previous year after a 53rd week in 2004 swelled turnover.
Net bakery sales fell 3.5 per cent to $3.3bn, compared to last year's $3.4bn.
Sales were also impacted by plans to shed unprofitable non-branded business.
"Although our business results are in line with what we anticipated, they are not what we want them to be, underscoring the need for the Transformation plan," said chief executive officer Brenda Barnes.
The Chicago-based company is currently entering the sixth month in its five-year "transformation" strategy.
It involves divesting activities that account for almost 40 per cent of income, with a view of focusing on three main businesses of meat, bakery and household products. The group has announced that it will cut 2,000 jobs.
The company, whose overall sales for 2005 fell 5 per cent to $4.8bn compared to last year's $5bn, aims to improve operational efficiency and reduce debt by at least $1.5bn in the next two years.
It has already reduced marketing spending for the bakery division by 17 per cent.
However some new products did show good growth in the unit over the year. Wheat hot dog buns and whole-wheat hamburger buns pushed sales up in the US, while in Europe, crustless bread boosted sales in Spain.
Refrigerated dough sales were also up for the fiscal year 2005, driven by success with private label products in Europe, particularly sales to discounters in Germany.
"We continue to focus on improving our operating results and believe they will get progressively better over the course of fiscal 2006. We are taking the right steps to make Sara Lee a substantially better company as quickly as possible," said Barnes.
