ConAgra net soars on acquisitions, investment gains

by Staff
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OMAHA, NEB. — Acquisitions and one-time investment gains contributed to a 167% increase in income during the first quarter.

For the quarter ended Aug. 26, the company had income of $250.1 million, equal to 61c per share on the common stock, which compared with income of $93.8 million, or 23c per share, during the same quarter of the previous year. Sales for the quarter were $3,311.9 million, up 7% from $3,105.3 million, during the same quarter of the previous year.

During the quarter, ConAgra recorded $130 million in gains related to the mark-to-market impact of derivatives used to hedge input costs.

“We are very pleased with our strong start to fiscal 2013,” said Gary Rodkin, chief executive officer. “Based on continued momentum in our potato operations, effective margin management initiatives across the portfolio and contribution from acquisitions, we are able to post a strong earnings per share performance in the midst of difficult marketplace conditions. It is clear that our operating capabilities, strategic initiatives, and prudent capital allocation are accelerating e.p.s. performance. We have raised our e.p.s. expectations for fiscal 2013 while continuing to make strong levels of marketing investment as part of long-term brand building initiatives.”

The Consumer Foods segment had an operating profit of $235.3 million during the first quarter of fiscal 2013, up 20% from $196.2 million during the same quarter of the previous year. Sales for the segment were $2,042.6 million, up 8% from $1,891.7 million during the same quarter of the previous year. ConAgra said sales benefitted from growth in several brands, including Act II, Lightlife, Marie Callender’s, Orville Redenbacher’s, Pam, Peter Pan, Reddi-wip, Slim Jim and Wesson.

“Despite the recent increase in many commodities prices, net inflation for the Consumer Foods segment is expected to be slightly lower than originally planned; this reflects the company’s effective procurement and hedging programs as well as the nature of the company’s raw input needs,” ConAgra said. “The segment’s year-over-year volume performance is expected to improve throughout the fiscal year as the company laps the volume impact of price increases taken in fiscal 2012; the segment’s innovation pipeline and increased marketing investment are expected to contribute to sequentially improved volume performance as the fiscal year progresses.”

The Commercial Foods segment posted operating profit of $139.6 million, up 43% from $97.5 million during the same quarter of the previous year. Flour milling profits were in line with year-ago amounts, ConAgra said. The segment had sales of $1,269.3 million, up 5% from $1,213.6 million. ConAgra attributed the sales growth to a strong top-line performance for the Lamb Weston potato operations, which posted good volume growth, particularly in international markets, as well as favorable price/mix.

The company now expects fiscal 2013 earnings per share to be in the range of $2.03 to $2.06, adjusted for items impacting comparability. This is up from a previous forecast of $1.95 to $1.99. It also announced it is increasing its quarterly dividend to 25c per share from 24c per share, for an annualized rate increase to $1 per share.

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