ConAgra reports higher earnings during restructuring
by Monica Watrous
ConAgra Foods, Inc. posted strong profit growth.
OMAHA — ConAgra Foods, Inc. posted strong profit growth against the backdrop of “bold moves” that have included the divestiture of its private label operations, the roll-out of a cost-reduction program, the relocation of headquarters from Omaha to Chicago and the announcement of plans to split into two independent companies.
For the second quarter ended Nov. 29, ConAgra had net income of $154.9 million, equal to 36c per share on the common stock, which compared with $10 million, or 2c per share, for the prior-year period. Profit in the comparable quarter included a loss of $202.8 million from discontinued operations. Net sales declined 1.4 percent to $3,092.7 million from year-ago sales of $3,136.4 million.
Operating profit in the Consumer Foods segment advanced 10 percent to $330.9 million from $300.9 million in the prior-year period, reflecting strong productivity and lower commodity input costs. Segment sales fell 2.9 percent to $1,983.2 million from $2,043 million. Brands posting growth during the quarter included Marie Callender’s, Slim Jim, Reddi-wip, Odom’s Tennessee Pride, Blue Bonnet, Libby’s, Peter Pan, Egg Beater’s, PF Chang’s, David, Van Camp’s, Kid Cuisine and Crunch ‘n Munch. The company said initiatives to discontinue unprofitable products contributed to a 3 percent decline in volume.
|Sean Connolly, c.e.o. and president of ConAgra Foods
“In our branded business we achieved our objective of delivering strong margin expansion by continuing to focus on price/mix, productivity and portfolio segmentation,” said Sean Connolly, chief executive officer and president of ConAgra Foods.
In the Commercial Foods segment, operating profit increased 11 percent to $162.2 million from year-ago profit of $146.8 million, and sales rose 1 percent to $1,109.5 million from comparable sales of $1,093.4 million, driven by global growth of Lamb Weston’s potato operations.
“At Lamb Weston, we continued to generate good growth, particularly in our international business,” Connolly said. “We’re encouraged by the progress we’re seeing in advance of separating into two independent pure-play companies, which is a direct reflection of our team’s determination and commitment to perform better and more consistently.”
ConAgra said its previously announced sale of its private label operations to TreeHouse Foods, Inc. is on track and expected to close in the first quarter of calendar 2016.
*Amounts exclude the impact of discontinued operations of the Gilroy Foods & Flavors operations, the frozen handhelds operations, Lightlife operations, the Medallion Foods operations, and the ConAgra Mills operations
“The bold moves we’re making are positioning us well to deliver long-term shareholder value,” Connolly said.
For the first six months of the fiscal year, ConAgra posted a net loss of $999.2 million, which compared with net income of $492.3 million for the same period of the previous year. First-quarter earnings were dragged down by an impairment charge totaling $1.95 billion pretax on the company’s private label operations. Net sales for the first half of the fiscal year eased 0.2 percent to $5,886.5 million from $5,899.4 million.