March 27, 2009
ConAgra 3Q net falls on absence of trading operations; cuts capex view
ConAgra Foods Inc.'s fiscal third-quarter net income fell 37 percent on year-earlier gains from discontinued operations as this year's results were absent the trading operations sold last year.
The packaged food company also cut its outlook for fiscal-year capital spending by US$25 million to US$450 million.
ConAgra has been hurt by hedging costs as commodity prices plunged from their July peak. The company is in the private-label business, which have been strong sellers of late amid the recession, but some of ConAgra's brands compete against such products.
Food makers have said they are counting on sales volumes to rebound in the second half of 2009, but some have expressed doubt because of the market-share gains made by private-label goods.
For the period ended February 22, the maker of Chef Boyardee pasta, Hunt's ketchup and Peter Pan peanut butter posted net income of US$193.2 million, or 43 cents a share, down from US$309.1 million, or 63 cents a share, a year earlier. The company said earnings from continuing operations, excluding hedging and recall impacts rose to 40 cents from 34 cents. The latest results included 5 cents in gains from reclassifying prior losses on derivatives to its operating segments instead of unallocated expenses.
Net sales increased 6.1 percent to US$3.13 billion.
Analysts polled by Thomson Reuters expected earnings, excluding items, of 37 cents on revenue of US$3.11 billion.
Consumer-foods sales rose 4.8 percent despite a 4 percent volume drop thanks to price increases, while earnings increased 12 percent. Volume woes for Peter Pan stemmed in part from a prior-year sales boost caused by promotional activity surrounding the production's reintroduction from contamination linked to salmonella. Industrywide peanut-butter sales have been weak amid from the recent recall by Peanut Corp. of America.
Commercial-foods sales rose 8 percent as profits fell 3 percent.
ConAgra, which affirmed its fiscal-year earnings outlook, sold its profitable commodity trading and merchandising operations in June to an investor group led by Ospraie Management for US$2.8 billion to focus on its food business.
ConAgra shares closed Wednesday at US$15.56 and haven't traded premarket. The stock is off 5.7 percent so far this year, outperforming the broader market.
