ConAgra Foods, which makes foods under the Healthy Choice and Peter Pan brands, reported a decline in its net income due to the sale of its profitable grain-trading business, even as sales improved in its consumer foods business and the company backed its fiscal year profit target. Overall, its Q3 results managed to beat analysts' expectations.
ConAgra earned $193.2 million, or 43 cents a share, for the three months ended 22 February, down from $309.1 million, or 63 cents a share, a year ago. The results for last year's third quarter included income from a commodity trading business that has since been sold. Excluding one-time items, the company said it earned 40 cents per share. That tops the 36 cents a share expected by analysts.
The commodity trading business, which was sold in June 2008, added 29 cents per share to results in the same period a year earlier. Excluding income from that unit, profit was 43 cents per share. Revenue rose 6 per cent to $3.13 billion from $2.96 billion a year ago. The bulk of the company's sales came from its consumer food segment, where revenue rose 4.8 per cent to $2.01 billion, from $1.92 billion in the same period last year.
The Omaha, Nebraska-based company is in the process of pushing new frozen food meals and snacks to improve growth in its consumer foods business, which accounts for 63 per cent of its total sales. It's revamped its value-oriented Banquet frozen dinner line as well as introduced new Marie Callender and Healthy Choice frozen entrees.
ConAgra is looking for its new products to trump aggressive price promotions from Nestle in the frozen meals category. The consumer business is being boosted by moderating commodity expenses, reduced supplier costs, product-price increases and eliminating lower-margin products like ACT II popcorn, the company said.
''The foundation that we've been building is going to start to pay some fruits for us,'' CEO Gary Rodkin said. ''We've got a portfolio that plays pretty well in this environment because it's a good balance of value-oriented brands as well as value-added brands.''
While the ''pain'' of the current recession could go on for years, this month's advance in the stock market is a positive sign, Rodkin said. He also said he's encouraged to see US officials acting to solve the crisis. ''If you're not confident enough in the future, you don't spend,'' he said. ''When consumers don't spend, that multiplier effect is so dramatic.''