Standard & Poor's lowers ConAgra ratings

by Eric Schroeder
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NEW YORK — Standard & Poor’s Ratings Services on April 3 lowered the corporate credit rating on Omaha-based ConAgra Foods, Inc. to "BBB" from "BBB+". The ratings service also removed all ratings on ConAgra from CreditWatch with negative implications while maintaining its stable outlook for the company.

"The downgrade reflects ConAgra’s continued weak credit measures and our expectation for limited improvement due to a challenging operating environment," S.&P. said. "The ratings reflect ConAgra’s diverse portfolio of well-known packaged food brands and its good geographic coverage in the U.S. Higher operating costs that negatively affected margins, particularly in the company’s consumer foods segment (about 64% of fiscal 2008 revenues), and Standard & Poor’s concern that the company’s core packaged food business will be challenged to improve performance in the near term amid a challenging operating environment, partially offset these factors.

Alison Sullivan, credit analyst for S.&P., said the ratings service expects ConAgra "to modestly improve credit measures from current levels over the next two years." She said ConAgra also should effectively manage its diverse business portfolio and operating performance in the core consumer foods operations in the near term to improve profitability.

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