ConAgra lost $31.7 million in third quarter due to restructuring
OMAHA, Neb. (AP) _ Packaged food company ConAgra Foods Inc. on Thursday reported a loss of $31.7 million for the third quarter because of one-time charges related to the restructuring plan the company announced last week.
The Omaha-based company lost 6 cents per share in the quarter after reporting income of $165.3 million, or 32 cents, last year. Excluding 43 cents per share of restructuring, impairment and legal charges, earnings were 37 cents per share.
Net sales totaled $2.88 billion, a 4 percent gain from $2.76 billion a year earlier. ConAgra's retail sales rose 3 percent to $1.66 billion, while food service sales added 4 percent and ingredient sales swelled 8 percent.
``Although the underlying operating performance in the third quarter met our overall expectations, our fundamentals still need to be much stronger,'' said Gary Rodkin, ConAgra's president and chief executive. ``As we discussed last week with the investment community, we expect to make meaningful progress going forward by simplifying our portfolio, aggressively attacking costs and increasing investments behind key brands.''
On average, analysts surveyed by Thomson Financial were looking for the company to report a profit of 34 cents per share and $3.53 billion in sales.
Last week the company detailed its plans to sell its seafood and cheese lines along with its refrigerated meats businesses, so it can streamline and focus on its brands with the most potential.
The seafood, cheese and refrigerated meats up for sale generated about $2.8 billion of the company's $14.57 billion of total annual revenue last year.
Rodkin, who joined ConAgra in October, has previously said Healthy Choice, Chef Boyardee and Egg Beaters were some of the company's top brands.
ConAgra said sales of its retail products grew 3 percent to $1.7 billion in the quarter. Hunt's, Marie Callender's, Orville Redenbacher and several of the company's other top brands all posted sales growth.
But the company said sales of its ACT II, Pam, Manwich and Swiss Miss brands all declined during the quarter.
The company reported retail products profit of $248 million, which includes a $23 million charge related to cost-cutting efforts. A year ago the segment saw $272 million operating profit. Retail products represent about 57 percent of the company's sales.
Sales of ConAgra's food service products increased 4 percent to $561 million in the quarter. But its profit of $41 million fell 28 percent largely because of an $18 million restructuring charge.
The company's food ingredients segment was the only division to report higher quarterly profits this year at $71 million. But last year's $60 million profits for the division were weighed down by a $15 million charge related to closing some manufacturing plants.
Sales by the company's food ingredients segment gained 8 percent, to $657 million from last year.
ConAgra also announced plans last week to cut its dividend, saying that it was freeing up cash to help pay for a $75 million annual increase in spending on marketing.
The quarterly dividend had been 27.25 cents per share since December 2004; it will drop to 18 cents a share. The new dividend is payable on June 1 to shareholders of record as of May 1.
ConAgra maintained its forecast for earnings in the second half of fiscal 2006 to exceed year-ago results, excluding unusual items. In the year-ago period, the company earned $1.35 per share, but its earnings then were hurt by high costs in its packaged meats operations and streamlining of its manufacturing.
Analysts predict full-year income of $1.32 per share and $14.46 billion in sales.