CPC's Earnings Increase On Sales Growth in Food
March 28, 2011
ENGLEWOOD CLIFFS, N.J. -- CPC International Inc., helped by solid sales growth of its food businesses, posted an 8.3% increase in second-quarter earnings, but said rising corn prices could hurt third-quarter results. The company's shares fell $2.125 Monday to $68.375 in composite trading on the New York Stock Exchange, amid a broad market sell-off. For the quarter, the maker of Hellmann's mayonnaise and Knorr soups reported net income of $153.9 million, or $1.04 a share, compared with $142 million, or 96 cents a share, a year earlier. Sales rose 23% to $2.51 billion from $2.04 billion, reflecting last year's acquisition of the baking business from Philip Morris Cos.' Kraft Foods unit and strong performance in Europe. CPC said high corn prices are increasingly hurting its corn-refining business, which accounts for about 13% of its earnings. The business posted a 44% drop in operating income in the second quarter, and CPC said the heaviest impact is likely to be in the third quarter, ``possibly substantially offsetting the favorable third-quarter results we expect from our consumer food businesses.'' The outlook ``suggests a flattish quarter, which spooked the stock,'' said Johnetta O'Nestor, an analyst with Bankers Trust Securities Corp.. The latest quarter's results include a previously expected charge of $4.5 million, or three cents a share, to settle a class-action lawsuit filed by beverage and food companies over alleged collusion and price-fixing in producing high fructose corn syrup. Without the charge, earnings would have been $1.07 a share, a penny ahead of the consensus estimate from analysts surveyed by First Call.
VastPress 2011 Vastopolis
