Sara Lee Corp.swung to a loss during the third quarter ended March 31, primarily due to discontinued operations and costs associated with its impending split.
After the news, shares fell 5.5 percent to $21.10 in premarket trade from Wednesday’s close on the New York Stock Exchange at $22.32.
The Downers Grove-based company is preparing to split into two publicly-traded companies on June 30 — a North American meat business based in Chicago and an international coffee and tea business to be based in Europe.
The company reported a $2 million loss, compared to a $156 million profit a year ago. Total sales increased 2 percent to $1.9 billion, including a 0.8 percent gain in the North American meats business, to $675 million.
Sales volume declined 0.6 percent as prices increased 4.3 percent to recover commodity costs in the North American business, but Sara Lee underscored that the trend is improving. The overall volume decline was pinned on the bakery business, which reported a 6.6 percent decline in sales volume, as the meats business posted a 0.7 percent increase.
Income from continuing operations declined 70 percent primarily due to discontinued businesses, to $38 million from $124 million a year ago.
For the quarter, the company reported $131 million in what it termed “significant items,” primarily due to the termination of an agreement with Royal Phillips, and costs associated with the spin. Sara Lee projects $550 million in such items for the full year.
Sara Lee also recorded $129 million in charges associated with exiting businesses and $2 million in accounting charges during the first quarter.
On a brighter note, Sara Lee also reported signs of moderating commodity costs, and reaffirmed guidance.
“After two years of steep commodity cost increases, we finally see a stabilization and, in the case of coffee, a reversal of raw material trends,” Sara Lee CEO Marcel Smits said in a statement. “For the first time in two years, both businesses recovered their commodity cost increases and will see further benefits in the fourth quarter, particularly in coffee.”
eyork@tribune.com | Twitter: @emilyyork
