Sara Lee Corp. reported lower operating income and diluted earnings per share from continuing operations for the first quarter of fiscal 2011, primarily due to higher commodity costs net of pricing, increased marketing spending and receipt of the final installment of contingent sale proceeds in the year-ago quarter. First quarter results compare to a strong year-ago period, when decreasing commodity costs provided a significant benefit to the company. Net sales from continuing operations were slightly down for the quarter on a reported basis, primarily due to the weaker Euro, as adjusted net sales were up driven by strength in the company’s two growth businesses, North American Retail and International Beverage.

The company also announced that it has agreed to sell its North American Fresh Bakery business to Grupo Bimbo for $959 million. The proposed deal, which is subject to customary closing conditions and regulatory clearances, is anticipated to close in the first half of calendar year 2011. The combination of Sara Lee’s North American Fresh Bakery business with Bimbo Bakeries USA creates a leading national fresh bakery company in the United States.

“The sale of the North American Fresh Bakery business will allow us to aggressively invest in our core protein and coffee businesses. In both categories, we are a leading player, with healthy margins and a strong track record of innovation. We are actively pursuing growth here, organically and through acquisitions,” said Sara Lee Corp. interim CEO Marcel Smits.

“As anticipated, our first quarter operating income came in below the prior-year period. We see our price increases coming through across the board, but in the first quarter they still lagged sharply increasing commodity prices. We are confident that the additional price increases we have announced will mitigate commodity inflation for the full year,” he added.
“We are confident that the full year will reflect an acceleration of growth in our top-line and a further bottom-line improvement in our business, building on the past several strong years,” Smits concluded.

Net sales for the first quarter of fiscal 2011 were $2.6 billion, down 0.5% versus the year-ago period as a favorable shift in sales mix and higher prices were offset by lower unit volumes and unfavorable foreign currency exchange rates. The company’s adjusted net sales rose 1.5% in the quarter. This increase was driven by strong adjusted net sales growth in the North American Retail (sales up 7.3%, volume up 4.4%, mix up 1.3%) and International Beverage segments (sales up 4.6%, volume up 1.7%, mix down 0.3%).

MAP spending increased $13 million, or 18%, in the first quarter of fiscal 2011, driven by an increase in spending at the North American Retail and International Beverage segments. The North American Retail segment invested primarily behind two of its core retail brands, Hillshire Farm and Jimmy Dean, for the latter partly in support of the new Jimmy D’s product line.

In line with expectations, higher commodity costs net of pricing were a headwind for the North American Retail segment in the first quarter of fiscal 2011. This year’s quarter compares with a very strong year-ago period when margins were above the trend line of gradual improvement helped by a tailwind from lower commodity costs. In addition, the North American Retail segment continued to invest heavily behind two of its core retail brands, Hillshire Farm and Jimmy Dean, the launch of new products and other consumer-centric marketing programs. As a result, MAP increased by $10 million, or 38% year over year. Lastly, investments were made in the new Kansas City sliced meat plant that will become operational in early calendar year 2011, as well as in the implementation of the segment’s ERP and trade optimization systems.

In all, operating segment income decreased $17 million, or 20.6% in the first quarter to $63 million, while adjusted operating segment income decreased $19 million, or 23.0%. The impact of the higher commodity costs net of pricing, and marketing and other investments, were partially offset by a favorable sales mix shift into higher-margin products, the strong volume performance of the segment’s core retail business and continuous improvement and Project Accelerate savings.

Unit volumes increased 4.4% in the first quarter, driven by growth for Jimmy Dean breakfast sandwiches and sausages and Hillshire Farm lunchmeats and smoked sausage. Net sales of $707 million were up 7.3% in the first quarter, on a reported and adjusted basis, driven by higher unit volumes, favorable sales mix (up 1.3%), as well as higher prices. The segment successfully launched various new products, such as a line of kids-focused Jimmy Dean breakfast products under the Jimmy D’s sub-brand, lower sodium Hillshire Farm and Sara Lee lunch and deli meats and Hillshire Farm lunch meat variety packs.

Source: Sara Lee Corp.

Maple Leaf Foods to sell Ontario pork processing plant

Maple Leaf Foods Inc. announced that it is proceeding with the sale of its pork processing operation, located in Burlington, Ontario, to an affiliate of Sun Capital Partners Inc. Proceeds from the sale are estimated to be approximately $20 million. The transaction is expected to close within the next few days.

"This sale will complete the transformation of our fresh pork operations to focus our growth on branded, consumer-focused prepared meats and meals business," said Michael Vels, chief financial officer of Maple Leaf Foods. "We are very pleased to have secured a buyer who will continue to operate the facility, providing ongoing employment to a highly skilled workforce, and an important market for Ontario's hog producers."

The transaction includes a long-term contract with Maple Leaf Foods' rendering operations. The company's prepared meat operations in eastern Canada will continue to be an important customer for the facility.

Upon completion of this sale, Maple Leaf Foods will reduce its annual pork processing from over 7 million hogs in 2006 to approximately 4.3 million hogs, concentrated at its facility in Brandon, Manitoba. This highly efficient scale plant provides a high quality raw material supply for the company's prepared meats business.

Source: Maple Leaf Foods Inc.

McDonald's sees 6.5% sales increase in October

McDonald's Corp. announced global comparable sales growth of 6.5% in October. Sales in the United States were up 5.6%, sales in Europe were up 5.8%, and sales in Asia/Pacific, the Middle East and Africa increased 5.3%

"We are keeping the McDonald's brand in demand around the world by serving great-tasting, high-quality food at an outstanding value," said CEO Jim Skinner. "Moving forward, our customer focus, menu innovation, and the ongoing modernization of our convenient restaurants will continue to deliver the unique McDonald's experience that keeps customers coming back."

U.S. comparable sales increased 5.6% for the month, reflecting the combined power of McDonald's menu, marketing strategies and restaurant operations. The excitement of the Monopoly game promotion and the popularity of the featured core products including Chicken McNuggets, McGriddles, Big Mac and McCafe beverages were key drivers for the month.

Source: McDonald’s Corp.

NAMP's Canadian center-of-plate training set for Vancouver

The North American Meat Processors Association has announced a new venue for its annual Centre of the Plate Training in Canada: the well-known culinary school at Vancouver Community College (VCC) in Vancouver, British Columbia. The class, offered by NAMP and the Beef Information Centre (BIC), will be Wednesday, Feb. 23 through Friday, Feb. 25.

The course is co-sponsored by the Canadian Meat Council (CMC), Canadian Meat Business magazine, and the American Meat Industry Foundation (AMIF). The class will cover the beef, veal, lamb and pork specifications, as well as a session on processed meats. Steve Olson, NAMP’s Standards and Specifications Advisor, will be the lead instructor. BIC staff will conduct additional sessions with in-depth information on Canadian beef quality and marketing.
For more information, go to www.namp.com.

Source: NAMP

Golden Island jerky sales grow 200%

Despite the tough economy, manufacture of Asian-style Golden Island pork and beef jerky products under Universal Food Co. has grown 200 percent in the last year.

"Our best seller, Grilled BBQ Pork Jerky, which has a unique smoky flavor because each piece is grilled over an open flame, has helped fuel our growth," said Universal Food President Anna Kan. "Unlike traditional jerky that is tough and salty, our jerky is soft and sweet."

This soft and sweet flavor profile has driven growth at UFC as the company captures broader jerky consumption demographics which includes more than the customary male, age 17-49. Sales at Golden Island have been robust at stores across the nation, including Costco and Central Market, the upscale division of the Texas-based HEB Markets.

With over 20 unique flavors in the marketplace, Golden Island offers a variety of jerky like Honey Chipotle, Mandarin Orange and a whole cocktail series that includes Mai Tai and Coconut Rum.

Universal's creative flavors and profiles, coupled with its proprietary processing techniques, has allowed most of Golden Island's products to have half the sodium of traditional jerky while keeping the benefits of low fat and high protein.

"Our jerky is so flavorful that it doesn't need all that salt to make it taste phenomenal," Kan said. "We use only whole muscle meats, no fillers of any kind and we're working and to offer as many all natural options as possible."

Source: Universal Food Co. Inc.