Sara Lee breakup pressures Hillshire earnings
Jan. 31, 2013
by Keith Nunes
CHICAGO – As the Hillshire Brands Co. continues to gain its footing in the marketplace following the breakup of the Sara Lee Corp., its earnings remain challenged by the effects of discontinued operations related to the separation. For the second quarter of fiscal 2013, ended Dec. 29, the company saw its net income decline 86 percent to $65 million, equal to 53 cents per share on the common stock, from $470 million, or $3.94 per share, during the same quarter of the previous year.
When only continuing operations are taken into account, the company earned $58 million, or 47 cents per share, during the second quarter of fiscal 2013, compared with $10 million, or 9 cents per share, during the second quarter of 2012.
Sales for the quarter were $1,060 million, a slight increase compared with the previous year of $1,053 million.
“Our business is continuing to perform well and I am very pleased with the progress we’re making,” said Sean Connolly, president and CEO, The Hillshire Brands Co., commenting on the performance of the company’s continuing operations. “Our investment in MAP is strengthening our core brands, our innovation pipeline is becoming more robust, and we remain highly focused on managing costs. We also clearly benefited from favorable input costs, an area that we expect to become more challenging in calendar year 2013. Based on our strong first-half results, and taking into account our outlook for the rest of the year, we are raising full year EPS guidance.”
Net sales in the Retail segment climbed 2.2 percent on higher volumes and favorable mix. Strong performance in Jimmy Dean sandwiches, Aidells and Hillshire Farm lunchmeat fueled the volume gains in the quarter. Hillshire Farm seasonal items also recorded a strong performance.
Additionally, Hillshire Farm lunchmeat’s packaging improvements and product quality enhancements are on track to roll out in the third quarter, the company said.
The company raised its fiscal 2013 guidance to $1.60 to $1.70 per share with slightly positive sales growth for the year.
For the first two quarters of fiscal 2013, Hillshire’s net income declined 53 percent from $252 million, or $2.10 per share, in fiscal 2012 to $118 million, or 96 cents per share, in fiscal 2013.
On a continuing operations basis, net income rose to $107 million, or 87 cents per share, from $15 million, or 13 cents per share, the previous year.
Sales for the first half of the year declined slightly to $2,034 million from $2,040 million during the previous year.