Ralcorp Holdings Inc.'s (RAH) fiscal third-quarter profit slid
47% as the food maker recorded a write-down charge and other items
that masked a jump in revenue as overall sales volume
increased.
Separately, the company disclosed it entered into an agreement
to pay about $545 million to buy Sara Lee Corp.'s (SLE) North
American private-brand refrigerated dough business, which recorded
net sales of over $300 million for the fiscal year ended July 2010.
The deal is expected to add to earnings by over 30 cents in the
first year, including synergies but excluding one-time acquisition
related expenses.
"This transaction will allow Ralcorp to be a private-brand
leader in the $1.8 billion refrigerated dough category," said
Co-Chief Executive and President Kevin J. Hunt.
Ralcorp last month detailed plans to spin off Post Foods--the
manufacturer of Honey Bunches of Oats, Grape-Nuts and Post Raisin
Bran--throwing a curve ball into ConAgra Foods Inc.'s (CAG) attempt
to buy the entire company for $4.9 billion. Two other food
companies--Sara Lee and Kraft Foods Inc. (KFT)--have also laid out
plans to split.
Ralcorp also offered a weak outlook for the latest quarter and
trimmed its full-year view in July, citing lower-than-expected
branded cereal volumes and a jump in raw materials for
private-branded offerings that outpaced price increases.
For the period ended June 30, Ralcorp reported earnings of $28.3
million, or 50 a share, down from $53 million, or 95 a share, a
year earlier. Excluding a write-down in the latest period and other
impacts, adjusted earnings rose to $1.15 a share from $1.11. Last
month, the company projected earnings of $1.13 to $1.18.
Revenue grew 22% to $1.17 billion, above the $1.15 billion
projection from analysts polled by Thomson Reuters.
Gross margin narrowed to 24.7% from 25.5%.
Overall sales volume grew 28%. The snacks, sauces and spreads
business reported a 6% jump in sales, helped by higher volumes,
while branded and other cereal products reported an increase in
sales. Frozen bakery products sales were up 15%, helped by 5%
volume growth.
Shares or Ralcorp, which affirmed its full-year guidance, closed
at $74.29 and were inactive in after-hours trading.
-By John Kell, Dow Jones Newswires; 212-416-2480; john.kell@dowjones.com