March 21, 2014

ConAgra's Q3 earnings nearly doubled as sales soar

As a sharp increase in sales overshadowed lower volumes, ConAgra Food's third-quarter earnings nearly doubled with profit of US$234.3 million, or US$0.56 a share, compared to US$120 million, or US$0.29 a share, in the same period a year earlier.

The packaged-foods giant's revenue grew 15% to US$4.39 billion, just short of a consensus estimate of US$4.4 billion. ConAgra beat Wall Street's earnings view of US$0.60 a share.

ConAgra, which makes Hunt's ketchup, Chef Boyardee pasta and other products, has struggled amid pressures on consumer spending.

The Omaha, Nebraska-based company lowered its full-year outlook last month, citing weaker volumes. Meanwhile, it's taking ConAgra longer than anticipated to reach profitability targets at Ralcorp, its private brands business.

In the latest period, price cuts dragged down gross margins to 22.2% from 22.7%.

"As we have previously discussed, there are operating challenges that have impacted segment performance and overall earnings per share (EPS) growth, but we are encouraged by some pockets of strength," chief executive officer Gary Rodkin said.

ConAgra's consumer segment booked sales of US$1.87 billion, a 3.5% drop. ConAgra said a 3% decline in volume was driven by weakness at Chef Boyardee, Orville Redenbacher's and other key brands.

The addition of Ralcorp, which was acquired for US$4.95 billion last year, continued to lift ConAgra's revenue, with sales at its private brands unit more than doubling to US$1.06 billion. Commercial foods sales ticked less than 1% lower to US$1.47 billion.