ConAgra Foods Reports Solid Sales Performance and Double-Digit EPS Growth
The Consumer Foods segment posted sales of $2,043 million and operating profit of $253 million in the current quarter, and $1,956 million of sales and $247 million of operating profit in the year-ago period.
18/12/08 ConAgra Foods, Inc., one of North America's leading food companies, reported results for the fiscal 2009 second quarter ended Nov. 23, 2008 and confirmed that it expected total year diluted EPS from continuing operations to be slightly above $1.50, excluding items that impact comparability. Diluted EPS from continuing operations was $0.38 for the quarter, an increase of 41% from prior-year levels of $0.27. Overall sales grew 11%, reflecting the company's pricing actions across all segments over the last few quarters. Excluding $0.05 per diluted share of net expense in the current quarter and $0.03 of expense in the prior-year quarter from items that impact comparability, diluted EPS from continuing operations in the current quarter was $0.43, an increase of 43% from $0.30 in the year ago period. Items impacting comparability in the current year and prior year are summarized toward the end of this release.
Gary Rodkin, ConAgra Foods' chief executive officer, commented, "I am pleased to reconfirm our earnings outlook for fiscal 2009 given the dynamics of the current marketplace. Commercial Foods continued its outstanding top and bottom-line performance by managing volatile input costs through nimble pricing actions and operating excellence. We also substantially reduced operating costs through an over-delivery against cost savings targets in the Consumer Foods supply chain and successfully focused on SG&A expenses. While comparable Consumer Foods profits were down, we are confident that changes in our merchandising, slowing inflation, and other planned operating changes will reverse this trend in the back half of the year. Recent trends support our confidence for balance-of-year results."
The Consumer Foods segment posted sales of $2,043 million and operating profit of $253 million in the current quarter, and $1,956 million of sales and $247 million of operating profit in the year-ago period. The following segment commentary relates to comparable performance unless otherwise indicated (see page 8 for Regulation G reconciliation).
Consumer Foods' comparable sales growth was 4%, reflecting price increases necessitated by higher input costs as well as a 4% decline in unit volume. Brand details and subsegment performance can be found in the financial information and Q&A document accompanying this release.
Consumer Foods' comparable operating profit declined 8% to $253 million. Input cost inflation was approximately $170 million, significantly more than year-ago amounts. As expected, overall volume declines as well as previously discussed profit challenges for the Banquet(R) and Wesson(R) brands adversely impacted profits. Positive benefits occurred from strong sales performance in mass and club channels, lower SG&A expenses, and higher-than-planned cost savings.
The company expects comparable year-over-year profit growth for this segment in the back half of the fiscal year due to benefits from adjustments to merchandising programs, favorable cost savings trends and an expected moderation of input cost increases.
Specialty potato, dehydrated vegetable, seasonings, blends, flavors, and milled grain products sold to foodservice, retail and commercial channels worldwide.
During the quarter, sales for the Commercial Foods segment were $1,222 million, 23% ahead of last year, primarily reflecting increased prices driven by input cost increases for flour milling and, to a lesser extent, the Lamb Weston specialty potato operations. Segment operating profit was $156 million for the quarter, 18% ahead of the year-ago amounts; the profit increase reflects the overall sales growth along with operating efficiencies in the flour milling operations, including the favorable impact of a very high-quality wheat crop. Acquisitions at Lamb Weston contributed to profit growth, as did more efficient operations and improved performance from Gilroy dehydrated products and specialty spices. As the company has previously stated, given the unusually strong profits for this segment in the third quarter of fiscal 2008 due to market opportunities in the flour milling operations, the company has not planned for Commercial Foods profits in the third quarter of fiscal 2009 to be above year-ago amounts.
