April 8, 2013

ConAgra Foods sees 57.2% drop in earnings during fiscal Q3 2013

ConAgra Foods, a US packaged foods company, has reported net earnings at US$120 million, a drop of 57.2% for the fiscal third quarter of 2013, compared to the same period in 2012.

The decline was due to costs related to its acquisition of food producer, Ralcorp, although the move resulted in higher revenues.

For the quarter ending February 24, 2013, the company posted 13.4% increase in net sales to US$3.85 billion, compared with US$3.39 billion for the corresponding period in the fiscal 2012, with Ralcorp contributing US$292 million in sales and US$5 million in operating profit.

On January 29, ConAgra Foods completed the acquisition of Ralcorp. The company continues to expect earnings per share (EPS) benefit of approximately US$0.05 per diluted share in fiscal 2013 from this transaction.

ConAgra Foods chief executive officer, Gary Rodkin, said the company is pleased with the earlier-than-planned closing of the Ralcorp transaction, sequential improvement in the Consumer Foods volumes, comparable profit growth in both of the core business segments, and the announcement of Ardent Mills, a new proposed joint venture for the milling operations.

"Challenges remain for key areas of our business, but a combination of successful margin improvement initiatives and a more favourable input cost environment is enabling us to significantly increase our brand investment and deliver EPS growth," Rodkin added.

The company's consumer foods segment, which sells branded and non-branded foods to retail and foodservice channels, posted 6.8% increase in net sales to US$2.3 billion, while operating profit for the segment declined 14.2% to US$284.4 million. In the commercial foods segment, which sells potato products, seasonings, blends, flavours, and milled grain products to foodservice and commercial channels worldwide, the operating profit increased 11.1% to US$166.6 million, while sales increased 1.3% to US$1.25 billion.

During the quarter, marketing investment for the base business, excluding recent acquisitions, increased about 33%, reflecting the company's planned commitment to build long-term brand strength and the flexibility afforded by improved margins.

ConAgra Foods reaffirmed the expectations for fiscal 2013 diluted EPS to be approximately US$2.15.