ConAgra Foods said that it is making progress against its strategy to improve margins within a "more focused portfolio" and revealed that it expects to deliver news on the sale of its private label business this autumn.
Chief executive Sean Connolly said: "We are off to a strong start in fiscal 2016. While early days, we are making good progress against our plan to drive margin improvement within a more focused portfolio. In the near-term, we expect to grow profits modestly in fiscal 2016 across the consumer foods and commercial foods segments by building on the stronger foundations established last fiscal year, with an emphasis on improving price/mix and implementing relentless cost discipline."
Delivering its first-quarter results today (22 September), ConAgra said that its consumer foods business posted "strong" operating profit growth and more than 250 basis points of margin improvement thanks to price/mix improvements and higher productivity. In its commercial foods arm, ConAgra hailed "good" sales and operating profit growth, thanks to "strong" volumes, favourable mix and efficiencies at Lamb Weston.
Stripping out the performance of ConAgra's private label unit, which has been reclassified as a discontinued business, total operating profit increased 21.9% to US$380.3m. Net sales from continuing operations rose 1.1% to $2.79bn from $2.76bn in the comparable period of last year.
ConAgra's net income, including private brands, fell to a loss of $2.88m versus an income of $1.14m last year. ConAgra said that it will provide more details on its full-year outlook as it progresses the sale process of private label operations.
"The company will offer more details on fiscal 2016 EPS guidance once it is further along with the process of divesting the private label operations, determining associated SG&A reduction targets, and finalising investment levels for the remaining segments. The company expects the consumer foods and commercial foods segments to post modest comparable operating profit growth for the full fiscal year," the company said.
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