UPDATE: ConAgra 1Q Profit Down 63% On Trading Sale; View Raised
22 September 2009 - 10:56PM
Dow Jones News
ConAgra Food Inc.'s (CAG) fiscal first-quarter earnings fell 63%
amid prior-year gains from the sale of its trading operations, but
earnings exceeded analyst estimates as the packaged food maker saw
strong sales of its Hunt's tomato sauces and Healthy Choice
meals.
The results topped Wall Street views and led the company to
raise its fiscal-year earnings forecast to $1.70 a share from
June's view of $1.63 to $1.66. Like other packaged food makers,
ConAgra has benefited from a moderation in commodity costs, which
have helped profit margins. These food companies have seen sales
stay steady during the recession as consumers have spent more on
eating at home.
Chief Executive Gary Rodkin said ConAgra expects the consumer
foods business to show strong profits for the year amid cost
savings, manageable inflation and a favorable product mix.
A Citigroup analyst earlier this month predicted ConAgra's
fiscal-year earnings would top Wall Street's views on accelerated
food and drug sales growth, with much of it due to its Healthy
Choice and Marie Callender's frozen foods.
For the quarter ended Aug. 30, the company reported a profit of
$165.9 million, or 37 cents a share, down from $442.4 million, or
94 cents a share. Excluding restructuring and other impacts,
earnings from continuing operations rose to 38 cents from 23
cents.
Revenue decreased 3.1% to $2.96 billion.
Analysts polled by Thomson Reuters most recently were looking
for earnings of 34 cents on revenue of $3.09 billion.
At its consumer-foods unit, its largest, sales rose 1% despite
lower sales of its Slim Jim products owing to a June plant accident
and the elimination of some low-margin products. Volume fell 1%,
including the Slim Jim decline. But profit rose 34% amid the cost
cuts.
At its commercial-foods segment, sales fell 9% on lower flour
prices. Profit was up 5% despite restaurant-industry woes.
Shares closed at $22.33 on Monday and were up 0.4% premarket.
The stock is up 35% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com