Sara Lee looks to baked goods after financial setback

By Neil Merrett

- Last updated on GMT

Related tags: Baked goods, Baker, Baking, Sales

Despite set backs to its global expansion plans, the Sara Lee
corporation has revealed that's its North American bakery division
still remains profitable.

Even with the continuing strength in the value of its baked goods and coffee ranges however, the company was unable to prevent its target of €10b in sales by fiscal 2010 from slipping behind schedule.

In its 2006 fiscal report published earlier this week, the company revealed that excluding acquisitions it had made in the sector - including the butter Krust bakery business purchased in February - there had been a 7 per cent increase in net sales to €390m in its final quarter.

Profit was offset however, with operating costs resulting in a loss of over €130m for the final period.

The loss was blamed on both increased levels costs in energy, packing and labour, but mainly with the ongoing restructuring of the company. The restructuring is geared at selling off some assets like its European meats division, and other apparel including sportswear brand Champion, in a hope to concentrate on its more established bakery line, and other household goods.

These changes to the company seem particularly pertinent following the continued success of its baked goods, with the company having established itself as "the Leading Fresh Bread Brand In America," according to its financial report. The Soft and Smooth with Wholegrain product remains one of their best selling products, with the line expanding into hot dog rolls to capitalise on growth in the sector.

By stressing its continued focus on food, beverage, and household goods, it is estimated that sales growth can still be expected at 2 - 4 per cent per year.

Related topics: Grupo Bimbo, Markets

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