DOW JONES NEWSWIRES
ConAgra Food Inc.'s (CAG) fiscal first-quarter earnings fell 63%
on prior-year gains from the sale of its trading operations, while
earnings from continuing operations jumped on lower costs.
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. 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.
Meanwhile, many packaged-food companies have been hurt by
hedging losses - they narrowed to $8 million from $33 million a
year earlier for ConAgra.
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.
Gross margin rose to 24.2% from 19.3% as commodities costs
eased.
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 didn't trade premarket.
The stock is up 35% this year.
-By Tess Stynes, Dow Jones Newswires; 212-416-2481;
tess.stynes@dowjones.com