Sara Lee 3Q profit rises but misses estimates on high costs

By DAVE CARPENTER AP Business Writer

CHICAGO (AP) - Food and household products manufacturer Sara Lee Corp. said Tuesday its third-quarter profit rose 82 percent but fell well short of expectations amid volatile commodity prices. Its stock sank 6 percent.

The Downers Grove, Ill.-based company said 2008 earnings and revenues also would be below Wall Street's estimates.

The results from the most recent quarter were boosted by higher sales prices for its products and the weaker dollar's effect on international sales.

Earnings for the January-through-March period were $211 million, or 30 cents per share, from $116 million, or 16 cents per share, a year ago. Adjusted earnings climbed to 22 cents per share from 13 cents per share - two cents below the consensus estimate of analysts surveyed by Thomson Financial.

Sales for the maker of frozen cheesecakes and Ball Park hot dogs rose 10 percent to $3.24 billion from $2.94 billion.

Sara Lee said it expects fiscal 2008 adjusted earnings of 95 cents to 99 cents per share, excluding 18 cents per share received in the first quarter from the 1999 sale of its tobacco business. Analysts had estimated full-year adjusted earnings of $1 per share.

"A variety of external market pressures, including volatile commodity prices, continue to affect the industry," chairman and CEO Brenda Barnes said in a statement.

She said strong sales trends continued in the quarter and unit volumes were up in most of the company's business segments. Baked goods and international beverages were top performers.

Sara Lee sold its low-profit Mexican meats joint venture in the quarter and also announced recently that it is eliminating about 300 jobs, or around 1 percent of its North American work force. The cuts include about 100 jobs at its suburban Chicago headquarters and 200 elsewhere.

Shares in the company fell 90 cents, or 6.1 percent, to $13.86 in morning trading after trading as low as $13.66.

Through the first nine months of its fiscal year, Sara Lee reported net earnings of $593 million, or 82 cents per share, up from $387 million, or 52 cents per share, a year earlier. Revenues were $9.7 billion, up from $8.9 billion.

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On the Net:

http://www.saralee.com

(This version CORRECTS latest earnings figure to $211 million sted $234 million and rise to 82 pct sted doubles)