Omaha / NE. (caf) ConAgra Foods Inc., one of North America´s leading food companies, reported results for the fiscal 2009 third quarter ended February 22, 2009. Overall sales grew six percent. Diluted EPS from continuing operations was 0,43 USD for the quarter, an increase of 26 percent from prior-year levels of 0,34 USD. Excluding 0,03 USD per diluted share of net benefit in the current quarter from items impacting comparability, diluted EPS from continuing operations in the current quarter was 0,40 USD, an increase of 18 percent from 0,34 USD 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, said, «I am pleased that Consumer Foods profits grew over prior-year amounts and that we are positioned for even more improvement from that segment in the fiscal fourth quarter. Given our recent new product introductions, moderating inflation and strong cost savings, the foundation for this segment is much stronger than in recent years. We expected the slight decline in Commercial Foods profits given the exceptionally high profits generated in the year-ago period by capitalizing on opportunities in the turbulent wheat markets. We are confident in the strength of our underlying Commercial Foods operations and the ability of our management to navigate the current challenging economic conditions. We expect both of our operating segments to perform well in the fourth quarter and for supply chain savings and SG+A efficiencies to continue to be strong, resulting in fiscal 2009 EPS of slightly above $1.50, excluding items impacting comparability».
Consumer Foods Segment – 63 percent of Year-to-date sales
Branded consumer productssold in retail and foodservice channels.
The Consumer Foods segment posted sales of 2’014 million USD and operating profit of 245 million USD in the fiscal third quarter, and 1’921 million USD of sales and 218 million USD of operating profit in the year-ago period. The following segment commentary relates to comparable performance unless otherwise indicated.
Consumer Foods´ comparable sales growth was five percent, reflecting ten percent contribution from pricing and mix, partially offset by a four percent decline in unit volume and a one percent negative impact from foreign exchange. A significant portion of the volume decline was attributable to two brands, ACT II popcorn and Peter Pan peanut butter, as well as mix improvement efforts in the foodservice operations. The drop in ACT II volume reflected the intentional elimination of some very low-margin business in favor of more focus behind higher-margin Orville Redenbacher´s popcorn. The decrease in Peter Pan peanut butter reflected extremely high promotional activity as part of the brand´s reintroduction in the year-ago period, as well as the negative impact on the category stemming from a recent recall by another company.
Most of the segment´s major brands posted year-over-year sales increases for the quarter. Brand details and sub-segment performance can be found in the financial information and Q+A document accompanying this release. As part of transforming its frozen foods business and building on its strong snacks platform, the company recently introduced several new products (…).
Consumer Foods´ comparable operating profit increased six percent over prior year amounts to 245 million USD. Input cost inflation was approximately 140 million USD, which was significant, although less intense than in recent quarters. Inflation was partially offset by higher-than-planned supply chain savings as well as lower SG+A expense. Marketing expense increased, partly in connection with the new products introduced during the quarter.
The company expects stronger comparable year-over-year operating profit improvement for this segment in the fiscal fourth quarter primarily due to an expected moderation of inflation, favorable cost savings trends, new product traction in the marketplace, the ongoing transformation of the frozen foods operations, and the benefit of an extra week.
Commercial Foods Segment – 37 percent of Year-to-date sales
Specialty potato, dehydrated vegetable, seasonings, blends, flavors, and milled grain products sold to foodservice, retail and commercial channels worldwide.
For the fiscal third quarter, sales for the Commercial Foods segment were 1’121 million USD, eight percent ahead of year-ago amounts, primarily reflecting higher sales at Lamb Weston and, to a lesser extent, at ConAgra Mills. Segment operating profit was 140 million USD for the quarter, three percent below year-ago amounts. The modest operating profit decline reflects a difficult comparison with exceptionally high milling profits in the year-ago period generated by abnormal wheat market volatility. Overall operating profit performance during the quarter reflected continued strong performance by ConAgra Mills, although profits for those operations were below the exceptionally high amounts earned a year ago. The segment´s operating profit performance also reflects a more modest rate of growth from Lamb Weston and a decline at Gilroy Food and Flavors, largely the result of challenging market conditions for foodservice and industrial customers.
The company expects the segment to post strong operating profit results in the fiscal fourth quarter given momentum in the milling operations, expectations for continued solid top-line performance at Lamb Weston, and the benefit of an extra week.
Info: The complete statement inclusive «Hedging Activities», «Other Items», «Capital Items», «Outlook», «Major Items Affecting Q3 Fiscal 2009 EPS Comparability», «Discussion of Results», «Q3 Fiscal 2009 EPS from Continuing Operations» the company published in «ConAgra Foods Reports Strong EPS Growth, Good Sales Performance and Improved Consumer Foods Profits – Reaffirms Fiscal 2009 EPS Guidance».