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Sara Lee Reports Third Quarter Earnings

Stocks in this article: SLE

Jimmy Dean continues its strong performance with positive volume growth for the quarter. New innovations, including quesadillas and bowl variants, launched in Q3 and were supported by increased media and advertising spend.

The Ball Park frozen hamburger patty launch in Q3 extends the brand beyond hot dogs. Rollout of this new product will continue through Q4. Media and Advertising campaigns supporting Ball Park are also planned for Q4.

Efforts to refresh and reposition the Hillshire Farm brand continue. The Hillshire Farm sausage business showed improvement in the quarter behind new products launched earlier in the year, increased MAP spend and selected pricing actions implemented in Q2.

In the first nine months, adjusted and reported net sales were flat as pricing and sales mix virtually offset volume declines and higher slotting expenses. Adjusted operating segment income declined 3% and reported operating segment income declined 14% as lower volumes and higher commodity costs and slotting expenses were not entirely offset by lower SG&A costs and favorable pricing.

 

North American Foodservice & Specialty Meats

 
Third Quarter   ($ millions)   First Nine Months
2012   2011   % Change   Continuing Operations   2012   2011   % Change
           
231 225 2.9 Adjusted Net Sales 798 776 2.9
260 243 6.9 Reported Net Sales 881 807 9.1
6 1 NM MAP 16 5 NM
18 20 (7.4 ) Adjusted Op. Seg. Inc. 75 82 (8.3 )
17   21   (16.9 )   Reported Op. Seg. Inc.   77   82   (5.9 )
 

In the third quarter, adjusted and reported net sales increased by almost 3% and 7%, respectively, over the prior year’s third quarter as pricing more than offset volume declines in the segment. Adjusted and reported operating segment income declined as a result of the lower segment volumes and related manufacturing inefficiencies. Low single digit volume growth in the meat business was offset by high single-digit volume declines in bakery as that business continues to suffer from negative economic and industry trends.

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