DOW JONES NEWSWIRES
ConAgra Foods Inc.'s (CAG) fiscal third-quarter net income fell
37%on year-earlier gains from discontinued operations as this
year's results were absent the trading operations sold last
year.
The packaged food company also cut its outlook for fiscal-year
capital spending by $25 million to $450 million.
ConAgra has been hurt by hedging costs as commodity prices
plunged from their July peak. The company is in the private-label
business, which have been strong sellers of late amid the
recession, but some of ConAgra's brands compete against such
products.
Food makers have said they are counting on sales volumes to
rebound in the second half of 2009, but some have expressed doubt
because of the market-share gains made by private-label goods.
For the period ended Feb. 22, the maker of Chef Boyardee pasta,
Hunt's ketchup and Peter Pan peanut butter posted net income of
$193.2 million, or 43 cents a share, down from $309.1 million, or
63 cents a share, a year earlier. The company said earnings from
continuing operations, excluding hedging and recall impacts, rose
to 40 cents from 34 cents. The latest results included 5 cents in
gains from reclassifying prior losses on derivatives to its
operating segments instead of unallocated expenses.
Net sales increased 6.1% to $3.13 billion.
Analysts polled by Thomson Reuters expected earnings, excluding
items, of 37 cents on revenue of $3.11 billion.
Consumer-foods sales rose 4.8% despite a 4% volume drop thanks
to price increases, while earnings increased 12%. Volume woes for
Peter Pan stemmed in part from a prior-year sales boost caused by
promotional activity surrounding the production's reintroduction
from contamination linked to salmonella. Industrywide peanut-butter
sales have been weak amid from the recent recall by Peanut Corp. of
America.
Commercial-foods sales rose 8% as profits fell 3%.
ConAgra, which affirmed its fiscal-year earnings outlook, sold
its profitable commodity trading and merchandising operations in
June to an investor group led by Ospraie Management for $2.8
billion to focus on its food business.
ConAgra shares closed Wednesday at $15.56 and haven't traded
premarket. The stock is off 5.7% so far this year, outperforming
the broader market.
-By Kerry E. Grace, Dow Jones Newswires; 201-938-5089;
kerry.grace@dowjones.com