ConAgra swings to Q4 loss
OMAHA – A weak performance in ConAgra Foods' Private-Label segment weighed on the company's fourth-quarter results.
For the fourth quarter ended May 25, the company reported a net loss of $324.2 million, or 77 cents per share compared to a net income gain of $192.2 million, or 46 cents per share in the comparable year-ago quarter.
“We are disappointed with fiscal 2014 overall, and we have a very focused sense of urgency directed toward improving our results,” said Gary Rodkin, CEO. Despite the difficult year, we were able to generate substantial cash, meet our debt reduction commitments and pay a strong dividend.”
Revenues declined 2.8 percent to $4.44 billion, while gross margin declined to 20.4 percent from 21.1 percent.
Sales for the Commercial Foods segment gained 1 percent to $1.63 billion compared to $1.61 billion a year ago. Segment comparable operating profit was $190 million, 1 percent higher compared to a year ago.
The company's Private-Label segment posted an operating profit of $44 million, down $60 million compared to a year ago. ConAgra attributed the result to pricing concessions made because of competitive bids and customer service issues; and higher-than-planned operating costs.
Current quarter operating profit in the Consumer Foods segment slipped 3 percent to $268 million after adjusting for impairment charges. ConAgra noted that while several brands posted weak volumes, Healthy Choice, Orville Redenbacher's and Chef Boyardee drove overall volume declines.
“Our focus is on improving branded volumes through more effective trade, marketing, and resource allocation, particularly on several large underperforming brands,” Rodkin said. “We expect private brand profitability to strengthen through organic growth, strong synergies, and gradually improving price/mix.”
The company's outlook for fiscal 2015 earnings per share (EPS) reflects a mid-single digit rate of growth over the comparable fiscal 2014 EPS of $2.17. Fiscal 2016 and 2017 EPS is expected to show a high-single digit rate of annual EPS growth as the company benefits from a stronger underlying business, sizeable synergies, good productivity and efficiencies, and lower interest expense, according to the company.
“Some of the challenges from fiscal 2014 will still be with us in fiscal 2015, although we believe results will gradually improve throughout the fiscal year,” Rodkin added. “Given that, we consider fiscal 2015 to be a year of stabilization and recovery with a mid-single digit rate of EPS growth, which we expect to accelerate in fiscal 2016 and 2017 based on a stronger foundation. Throughout this period, we expect to benefit from strong productivity, robust cost synergies related to the Ralcorp acquisition, and SG&A efficiency and effectiveness initiatives. We will remain focused on growing our top line, continually improving our cost structure, and sound capital allocation.”