US consumer goods company Sara Lee has reported first-quarter profits of US$308m or 38 cents a share, up from $242m or 30 cents a share in the same period last year.

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Earnings per share before exceptional items came in at 37 cents, outstripping forecasts, up from 26 cents in the year-ago period.


Sara Lee, which makes products as diverse as shoe polish, sausages and bras, has been engaged in a cost-cutting campaign it refers to as ‘Reshaping’ for two years, closing production facilities, divesting loss-making divisions and shedding staff. These lower costs contributed to the robust performance of the profit line, which was also boosted by improved sales of higher-ticket goods and by more advantageous currency fluctuations.


Overall sales climbed 7% from $4.25bn to $4.53bn in the period under review, driven largely by the acquisition of the Earthgrains company. Unit volumes, excluding acquisitions and divestitures, were flat during the quarter, with gains in the company’s Meats, Intimates and Underwear, and Household and Body Care operations offset by declines in the Beverage and Bakery businesses.


The company said that operating income rose 25% as the restructuring programme kicked in and sales of higher margin products increased. The company’s strongest base business operating income gains occurred in the Meats and Intimates and Underwear businesses.

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C. Steven McMillan, chairman, president and chief executive officer of Sara Lee, commented: “My current priority is to make certain that Sara Lee invests in new product development, marketing support for our brands and enhanced organisational structures to deliver sustainable top-line growth. Innovation – in both our products and processes – is a key component of these activities. During this past quarter, we began to see results from several innovation initiatives such as our Senseo coffee system; the Jimmy Dean Fresh Taste. Fast! line of pre-cooked sausages and bacon; Playtex and Bali gel-strap bras; and the expanded distribution of Sara Lee bagels.


Looking forward, McMillan said the company expected recent initiatives to contribute to increased sales growth in future quarters.