ConAgra Foods: Reports Fiscal 2011 Second-Quarter Results

Omaha / NE. (caf) ConAgra Foods Inc., one of North America´s leading packaged food companies, reported results for the fiscal 2011 second quarter ended November 28, 2010. Diluted EPS from continuing operations was 0,45 USD as reported and on a comparable basis. For the same period a year ago, diluted EPS from continuing operations as reported was 0,53 USD, which included 0,02 USD of net benefit from items impacting comparability. Highlights:

  • Diluted EPS from continuing operations of 0,45 USD as reported and adjusted for items impacting comparability; down 15 percent as reported and down twelve percent on a comparable basis.
  • Consumer Foods´ unit volumes and unit market share increased, but profits declined reflecting difficult market conditions, weaker-than-planned response to promotions, and inflation that outpaced cost savings.
  • Pricing and merchandising actions currently under way, strong productivity, lower SG+A, and accelerating contribution from innovation and recently acquired businesses are expected to improve the Consumer Foods segment´s results.
  • Commercial Foods´ sales increased. Operating profits declined, reflecting the margin impact of selling and processing last year´s high-cost, unusually poor-quality potato crop. The new, good-quality crop currently being processed positions the segment for improvement.
  • Fiscal 2011 diluted EPS adjusted for items impacting comparability expected to grow at a low-single-digit rate over comparable fiscal 2010 EPS (Fiscal 2010 EPS: 1,67 USD as reported; 1,74 USD comparable base).
  • As previously disclosed, after quarter-end, the company received 554 million USD in cash from repayment of notes receivable related to a divestiture in 2008. The Board of Directors increased the company´s share repurchase authorization by this amount.
CEO Gary Rodkin: «Several challenges impacted our results. Difficult market conditions, weaker-than-planned consumer response to promotions, and higher-than-planned inflation weighed on Consumer Foods´ profits despite progress in overall unit market shares and volume. Profitability of our Commercial Foods segment was below expectations primarily due to selling and processing last year´s high-cost, unusually low-quality potato crop. In aggregate, it was a challenging quarter. Several factors are expected to improve year-over-year operating results in the second half of the fiscal year, despite the challenging environment. Very importantly, we are increasing net pricing on a number of our products given the ongoing acceleration of cost inflation. Some price increases have recently been implemented, and more are under way. We are confident that the net effect of these pricing increases will be positive, despite some potential modest volume decline. Our products will continue to deliver outstanding value to consumers even after these pricing actions. Price increases, along with strong cost savings, lower SG+A, accelerating contribution from innovation and recently acquired businesses, and a good-quality potato crop currently being processed are expected to drive improved year-over-year earnings for the rest of the fiscal year. Although the challenging environment is expected to cause this fiscal year´s anticipated EPS growth to be comparatively modest, the operating foundation of the company continues to be strong, and we are confident in our long-term EPS growth potential».

Info: ConAgra Foods Reports Fiscal 2011 Second-Quarter Results; Continues to Expect Strong Operating Cash Flow and Low-Single-Digit EPS Growth in Fiscal 2011 (complete press release).

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