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Hillshire Brands Outlines Plans for Growth

06 September 2012

US - Hillshire Brands' main priorities are to strengthen the company’s core brands, expand into adjacent new products and augment the strength of its portfolio through selective acquisitions.

The meat and food processing company, which is a spin off from the break up of Sara Lee, outlined its plans for the future at the Barclays Back-to-School Consumer Conference in Boston.

The company provided an overview of the its three-year strategic plan for generating profitable growth.

The company’s core brands – Hillshire Farm, Ball Park, Jimmy Dean, State Fair, Aidells and Gallo – form a leading platform for delivering differentiated, value-added products to consumers.

The company anticipates introducing innovative new line extensions and product upgrades to further enhance its portfolio.

The company is also firmly committed to supporting its products through greater marketing, advertising and promotion (MAP) spend as it seeks to expand revenue from new innovations¹ to between 13 per cent and 15 per cent of total revenue by fiscal 2015; up from historic levels of nine per cent of revenue.

“We are confident that our portfolio of leading retail brands presents significant untapped potential for profitable growth in the large and growing meat-centric meals and snacks markets,” said Sean Connolly, chief executive officer, Hillshire Brands.

“With an experienced senior leadership team now in place, we are focused on executing our strategic plan to drive long-term growth and profitability though brand-building and margin-accretive innovation. Ultimately, we believe these efforts will create significant value for our shareholders.”

Mr Connolly described the company’s three-year plan with the words fix, drive and expand, which characterise Hillshire’s focus in fiscal 2013, 2014 and 2015, respectively.

"This year, we are already seeing progress against our plans, and continue to work aggressively to strengthen the challenged portions of our portfolio like lunchmeat and foodservice bakery," Mr Connolly added.

“As a transition year, the initiatives we pursue in 2013 will strengthen our brands, reduce costs and fill our innovation pipeline. We are fully committed to making these investments as we position Hillshire Brands to achieve our targets for 2015 and beyond.”

Maria Henry, chief financial officer of Hillshire Brands, provided additional financial perspective on the company.

She announced that the company had adjusted diluted EPS for continuing operations of $1.47 for fiscal 2012 versus $1.20 for fiscal 2011, and on a reported basis, ($0.18) for fiscal 2012 versus $0.45 for fiscal 2011.

Ms Henry said the fiscal 2013 guidance of net sales in line with fiscal 2012, and adjusted EPS in the range of $1.40 and $1.55.

She also said that Hillshire Brands had long-term 2015 operating targets of two to three per cent growth with four to five per cent net sales growth.

“We continue to look at 2013 as a transition year with increased potential for variability that may impact our performance,” said Ms Henry.

“Our top priority is investing in our business in order to create sustainable, long-term shareholder value, and we believe we are well-positioned to do so with our strong balance sheet and attractive underlying cash flow.”

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