July 4, 2005

 

ConAgra's yearly earnings suffer overall fall

 

 

ConAgra's nett yearly income plummeted to US$641.5 million in the fiscal year 2004-05, down 21 percent from US$811.3 million last year.

 

However, nett sales for that fiscal year ending May 29 totalled US$14.6 billion, a 3.4 percent increase from US$14.1 billion in fiscal year 2003-04.

 

The earnings decline was most extreme in the fourth quarter, as income fell some 40 percent to US$101.9 million from US$169.3 million last year. Sales fell to US$3.71 billion in the fourth quarter.

 

ConAgra's fiscal year 2005 was characterised by a good first-half performance hampered by a weak second-half.

 

ConAgra said that while there were achievements in the company in fiscal year 2004-05-such as brand growth, and research and development and enterprise systems-they were overshadowed most significantly by its packaged meats operations.

 

Accounting for about 25 percent of revenue accrued in the retail products segment, lacklustre performance in the packaged meat operations led operating profits in that segment lower.

 

Operating profit for retail products fell by 7 percent from fiscal year 2003-04 at US$1.13 billion, though sales for the year increased by 2.8 percent to US$8.67 billion.

 

Fourth-quarter operating profit for that segment was again US$243.4 million, down 24 percent from the same quarter last year.

 

To improve its performance, ConAgra has removed several thousand low-volume stock-keeping units and will continue to do so in the next two fiscal years.

 

In addition, the company will soon complete its plans to reduce 1,000 salaried jobs, while undergoing manufacturing capacity utilization and productivity improvement.

 

In the fiscal year 2006, ConAgra expects annual earnings a share to grow by 5-9 percent.

 

However, it predicts first quarter 2005-06 earnings from its packaged meats operations to be lower than in 2004-05.

 

The company also does not expect to recover the shortfall of profits suffered from its packaged meats operations-which amounted to US$150 million in fiscal year 2004-05, compared with the year before.