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Sara Lee Profits Rise Despite Meat Recall Costs
Reuters
CHICAGO — Sara Lee Corp. said on Thursday its fiscal second quarter operating profits rose to $371 million or 39 cents a share, excluding the costs of a massive meat recall tied to an outbreak of a potentially deadly food-borne illness.

The maker of a wide range of products including Ball Park hot dogs and Coach handbags earned $319 million or 34 cents a diluted share in the second quarter ended Dec. 26, including a $76 million pretax charge. The charge covered the costs of recovering an estimated 15 million pounds of hot dogs, deli meats and other products that may be contaminated with a potentially deadly bacteria.

The $76 million charge was above the $50 million to $70 million range Sara Lee had estimated last month when it announced the voluntary meat recall.

The operating earnings matched Wall Street expectations, according to a First Call survey of 12 analysts.

Last year, Sara Lee posted a loss of $1.3 billion or $1.36 a diluted share including a $2 billion pretax restructuring charge. Without the charge, Sara Lee earned 34 cents a share.

Quarterly revenues were little changed at $5.3 billion.

"After-tax income increased in four of Sara Lee's five lines of business in the second quarter, with particularly strong double-digit profit gain for Sara Lee Foods," John Bryan, chairman and chief executive officer, said in a statement.

The foods division, which includes the packaged meat and bakery businesses, posted sales of $1.5 billion, down 1.3 percent from the prior year. Net income rose 17.7 percent to $100 million from $85 million a year ago.

Last month, Sara Lee's Bil Mar Foods division voluntarily recalled an estimated 15 million pounds of meat after the U.S. Centers for Disease Control and Prevention (CDC) linked it to an outbreak of the food-borne illness listeriosis.

The CDC said late Wednesday that at least 11 adults have died and three women have suffered miscarriages because of the illness, which primarily affects infants, the elderly, pregnant women, and people with weakened immune systems.

A Sara Lee spokeswoman was not available Thursday morning to comment on the CDC statement.

Shares of Sara Lee were down 50 cents at $25.4375 on the New York Stock Exchange.

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