MILWAUKEE — Consumers may be returning to grocery stores, but they are not racing for name-brand products, foodmakers Kraft Foods Inc. and Sara Lee Corp. said as they released their latest quarterly results Wednesday.
Both companies lowered their forecasts for the current and upcoming quarters because of weakness overseas and a rising U.S. dollar.
Kraft said it saw unit volume slip in its U.S. beverage, cheese and snack-nuts businesses, as it raised prices to offset higher input costs, and Sara Lee said it sold fewer deli and frozen bakery products.
To save money, consumers have been turning to private-label products that many grocery stores offer, said Christopher Shanahan, a research analyst with Frost & Sullivan.
“Income is basically not growing at the same rate as food prices and food budgets,” he said. “So now consumers are getting smarter. They’re increasingly considering private label and exploiting savings and cutting coupons.”
Kraft’s fourth-quarter profit fell 72 percent because of costs related to a restructuring program. Excluding one-time costs and an adjustment on a gain from splitting off Post cereals, net income was 43 cents per share.
Analysts polled by Thomson Reuters, who typically exclude one-time items, had expected 44 cents per share on average.
For the quarter, Sara Lee lost $17 million, largely because of a write-down related to its North American food-service beverage unit.
The loss amounted to 2 cents per share for the quarter, down from profit of $182 million, or 25 cents per share, a year ago.
Corporate Earnings
Cisco Systems
The technology bellwether said Wednesday that incoming orders declined drastically in January, indicating that the shrinking economy has more pain in store for the industry.
Chief executive John Chambers said the company, the world’s largest maker of computer-networking gear, saw fewer and fewer orders as its latest quarter progressed.
Cisco’s profit dropped 27 percent to $1.5 billion, or 26 cents per share, from $2.1 billion, or 33 cents per share, a year ago. Excluding items, earnings were 32 cents per share, beating the average analyst estimate by 2 cents.
Time Warner
The media and entertainment company reported a fourth-quarter loss, hurt by a $24.2 billion write- down for its cable, publishing and AOL assets.
Meanwhile, its cable arm, which is close to being spun off, said it would lay off 1,250 people over the next few weeks as growth slowed.
New York-based Time Warner posted a loss of $16.03 billion, or $4.47 per share, compared with profit of $1.03 billion, or 28 cents per share, a year ago.
Quarterly results were dragged down $4.70 per share mostly because of the $24.2 billion write-down.
Revenue for the period ended Dec. 31 dipped 3 percent to $12.31 billion from $12.64 billion on softness in its filmed- entertainment, AOL and publishing units.
Visa
The credit-card processor said its fiscal first-quarter profit rose by 35 percent as payment volume climbed despite the recession.
Visa reported net income of $574 million, or 74 cents per share. That’s up from $424 million, or 55 cents per share, in the same quarter a year ago. Excluding one-time charges, Visa earned $599 million, or 78 cents per share, in the latest quarter.
