* Q1 EPS of $0.51 tops Wall St view of $0.33 a share
* Hillshire stands by its 2013 earnings outlook for now
* Shares up more than 4 percent
Nov 1 Hillshire Brands Co reported a
first-quarter net profit on Thursday that exceeded Wall Street
estimates by a wide margin, helped by strength in its retail
business, and its shares rose 4.3 percent.
Despite the better-than-expected earnings, Hillshire
reiterated its full-year outlook for earnings per share of $1.40
to $1.55, as it waits to see if the trend continues.
The newly independent company, which makes Hillshire Farm
lunch meat and Jimmy Dean sausage, said its sales trends were
moving in the right direction, its key brands were gaining
strength and its costs were coming down.
"While we are pleased with this progress, we recognize that
we are only one quarter into our year," said Chief Executive
Sean Connolly. "We want to wait for greater visibility into the
cost picture and see our momentum continue to develop further
before making any changes to our outlook."
Connolly told Reuters the company would reevaluate its
forecast as the fiscal year progresses.
JP Morgan analyst Ken Goldman said the renewed forecast was
"slightly surprising given the magnitude of the beat, though we
think management is just being conservative until it gets better
clarity on pork costs."
Chief Financial Officer Maria Henry said commodity costs had
come down, but were expected to go back up later in the year.
This year's drought in the Midwest caused a surge in corn
prices, which led many hog producers to bring animals to market
sooner than normal.
That led to a higher supply of meat, which caused prices to
fall. In a few months, supplies will be tighter, which should
cause prices to go back up, she said.
The company reported net income of $53 million, or 43 cents
per share, for its fiscal first quarter ended on Sept. 29,
compared with a loss of $220 million, or $1.85 per share, a year
earlier, when the company was much larger and called Sara Lee.
The year ago number included a loss from discontinued operations
of $230 million.
Excluding items, earnings were 51 cents per share in the
latest quarter. On that basis, analysts on average were
expecting 33 cents per share, according to Thomson Reuters
Net sales fell 1.4 percent to $1.01 billion. Stripping away
the impact of the businesses sold in the past year, sales would
Hillshire Brands shares were up $1.13, or 4.3 percent, at
$27.14 on the New York Stock Exchange.