ConAgra Profits Fall in Q4

Operating profit of $226 million was 15% below year-ago amounts as reported. Current-quarter amounts include $69 million of net expense from items impacting comparability; excluding those amounts, current-quarter operating profit was $295 million, up 10% from year-ago amounts.

25 Jun 2010 --- ConAgra Foods, Inc., one of North America's leading food companies has reported results for the fiscal 2010 fourth quarter ended May 30, 2010. Diluted EPS from continuing operations was $0.27 compared with $0.38 a year ago. After adjusting for net $0.12 in the current quarter and net $0.03 in the year-ago period from items impacting comparability, current-quarter diluted EPS was $0.39, down from $0.41 for the same period a year ago. The decline was expected, principally due to the extra week in the year-ago period and challenges for the Lamb Weston operations.

Consistent with its long-term EPS goals, the company expects fiscal 2011 diluted EPS, adjusted for items impacting comparability, to reflect 8-10% growth from its fiscal 2010 diluted comparable EPS of $1.74. The company expects the EPS growth to be concentrated in the second half of the fiscal year. This timing largely reflects:

Gary Rodkin, ConAgra Foods' chief executive officer, commented, "We are pleased with our fiscal year, posting comparable diluted EPS of $1.74 and generating very strong operating cash flow of $1.4 billion. We grew year-over-year unit and dollar market share in our Consumer Foods segment, reflecting successful sales, innovation, and marketing initiatives. This top-line progress, coupled with cost savings initiatives, allowed us to generate strong earnings, invest for the future, and more than offset challenges affecting our Commercial Foods segment. We are confident that fiscal 2011 will continue to demonstrate our company's earnings power and ability to generate strong cash flows."

The Consumer Foods segment posted sales of $2,029 million and operating profit of $226 million for the quarter. Sales declined 4% as reported but increased 3% on a comparable 13-week basis. Unit volumes increased 3% on a comparable 13-week basis. Foreign exchange favorably impacted sales growth by 1%.
• On a comparable 13-week basis, large brands that posted sales growth in the current quarter include Banquet, Chef Boyardee, DAVID, Healthy Choice, Hunt's, PAM, Peter Pan, Rosarita, Slim Jim, Snack Pack, and others.
• Sales growth reflects the ongoing benefit of innovation, particularly in the frozen foods operations, as well as high-impact marketing investments over the last several quarters and strengthening customer relationships.
• More brand details can be found in the Q&A document accompanying this release.

Operating profit of $226 million was 15% below year-ago amounts as reported. Current-quarter amounts include $69 million of net expense from items impacting comparability; excluding those amounts, current-quarter operating profit was $295 million, up 10% from year-ago amounts. The comparable year-over-year profit improvement primarily reflects strong cost savings efficiencies that more than offset modest input cost inflation. See page 11 for a Regulation G reconciliation of Consumer Foods segment sales and operating profit amounts, which detail the items impacting comparability for those measurements.

Given progress with initiatives involving operating efficiencies, innovation, marketing, and customer service, the company is confident in the strength of the foundation of this segment as it plans for profitable future growth.

Fiscal fourth quarter sales for the Commercial Foodssegment were $1,033 million, 6% below last year's $1,103 million, reflecting the impact of an extra week last year as well as lower flour milling sales in the current quarter due to the pass-through impact of lower underlying wheat costs. Segment operating profit was $111 million, 26% below last year's $151 million. The profit decline reflects the extra week last year and unfavorable product costs at Lamb Weston resulting from a poor-quality potato crop. Lamb Weston's weaker profit performance also reflects the impact of a cost allocation process change as previously communicated, which benefited earlier fiscal quarters this year but which negatively impacted the current quarter. Although below last year's outstanding results, flour milling profits remained very strong from a tight focus on product mix, operating efficiencies, and capitalizing on market opportunities.