September 25, 2006

Conagra's divestiture programmes bring cost savings and new initiatives

ConAgra Foods Inc, Omaha, Neb., one of North America's leading packaged food companies, reported positive preliminary results for the fiscal 2007 first quarter ended Aug 27, 2006.

The company has made good progress on cost savings and on completing the divestitures outlined last March, said Gary Rodkin, ConAgra Foods' chief executive officer.

Rapid implementation of the divestiture programme allowed the company to focus on other cost-reduction measures earlier than expected.

The company would now use the savings toward high-quality marketing programmes and investments in innovation, he said.

For the quarter, sales for the Consumer Foods segment were US$1.5 billion, a 1 percent increase from last year.

The high-focus brands as a group, which represent more than two-thirds of segment sales, posted 4 percent sales growth that more than offset revenue declines in lower-priority brands.

Segment operating profit was US$181 million for the quarter, 9 percent ahead of the US$166 million reported for last year, the result of more efficient operations and mix improvement, the company said.

Excluding restructuring charges of US$26 million in the current quarter, operating profit increased 24 percent over year-ago amounts.

Advertising and promotion expense was slightly lower than in the year-ago period, but is expected to increase throughout the balance of fiscal 2007.