December 27, 2005

ConAgra Q2 net falls 32 percent

ConAgra Foods Inc. said its second-quarter profit fell 32 percent as results weakened in its core retail products segment. The earnings decline comes on the heels of a first quarter in which the maker of Butterball turkeys and Chef Boyardee foods more than doubled its earnings from the previous year.

Net income in the second quarter ended Nov 27 was $163.1 million, down from $239.6 million in the same period last year. Excluding impairment charges and severance costs, earnings were 38 cents per share in the recent quarter.

Sales fell 5 percent to $3.81 billion, compared with $4.01 billion in the year-ago quarter.

Q2 operating profit in the Retail Products segment was $310.5 million, down 17 percent from $373 million last year. The decline was due mainly to weak volumes and higher operating costs. In addition, operating profit was adversely affected by approximately $8 million, attributed to the recent recall of the company's ready-to-eat lunch kits.

Earlier in the week, ConAgra detailed changes to its corporate and business operating structures to realign and clarify accountability. The changes are effective immediately.

The changes are meant to improve accountability and reduce complexity in the management structure, said Gary Rodkin, ConAgra Foods president and chief executive officer.

Among the key organizational changes undertaken by ConAgra was a realignment of ConAgra Foods from three operating channels to two, with the previous ConAgra Foodservice being merged with ConAgra Food Ingredients to form ConAgra Foods Commercial.