Bakery segments behind sales turnaround for Sara Lee

By Karen Willmer

- Last updated on GMT

Related tags: Sara lee, Generally accepted accounting principles

Net sales for Sara Lee increased 7.1 per cent to $12.3bn (€9.1bn)
for the fiscal year 2007 from $11.5bn (€8.5bn) the previous year,
the company has said.

Sara Lee said sales increased across all segments, with increases of 7.8 per cent within the international bakery segment and 6.8 per cent within the North American retail bakery segment. Total operating income increased 31.9 per cent to $556m for the fiscal year ending 30 June 2007. The company also noted particular strong growth within international beverages at 12.8 per cent and an increase of 11.8 per cent in the household and body care segment. Sara Lee claims the growth is due to improved marketing and restructuring over the past year. Sales within the North American retail bakery segments increased to $2bn with operating income of minus $2m compared to a loss of $170m in 2006. Sara Lee said this was due to less impairment charges than the previous year as well as higher prices and further savings. Operating margins were at minus 0.1 per cent compared to minus 10.7 per cent the previous fiscal year. The company claims to still hold the number one fresh bakery brand in the US with a 7.9 per cent share of the market. Sales within international bakery increased to £799m with operating income of $38m compared to $20m in 2006. The company said this was particularly due to growth within the Spanish fresh bakery business and the European refrigerated dough business. Operating margins for the segment were up 2.1 per cent to 4.7 per cent for the year. Sales within the international beverage business increased to $2.6bn for the fiscal year, however operating income declined 18.4 per cent to $317m for the year. Sara Lee said this was due to impairment charges in the second quarter of 2007. Net sales for the foodservices segment increased 0.8 per cent to $2.2bn for the period although the company said the increase in input costs has affected margins. Margins were up 1 per cent to 6.3 per cent for the segment. "We achieved higher sales and marketing capability, combined with a robust innovation pipeline, will continue to drive our performance for the coming year," said Sara Lee's chief executive officer, Brenda Barnes. "Having completed our disposition program and our organisational restructuring, our one-time transformation activities are behind us. We have now entered a growth phase for Sara Lee."

Related topics: Markets, Grupo Bimbo

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