Nebraska-based packaged foods company ConAgra said yesterday (21 September) that its profits from continuing operations for the first quarter were down 66% from the first quarter of last year when results were boosted by a one-off gain.

The company said that it is only releasing preliminary results at this time because the results of discontinued operations are yet to be finalised to reflect the sale of its European refrigerated meats business to Smithfield Foods this July. 

Profit from continuing operations for the quarter totalled US$108.5m, or $0.21 per share, down from $319.2m, or $0.61 per share, posted for the comparable period of last year. EPS for Q12007 included  a $0.05 charge per share for restructuring costs.
Despite the drop in profits, ConAgra’s revenues increased by 1% from $2.67bn last year to $2.69bn for the quarter ended 27 August. Sales in the consumer foods segment were up 1% and sales in the food and ingredients division increased by 8%. However, sales in the trading and merchandise unit were hit by difficult market conditions in energy-related and agricultural industries, dropping by 21%. International food sales were also down slightly, declining 1%, the company said.
ConAgra is currently implementing a cost-cutting programme that includes the sale of business units and closure of production facilities. The company said that it expects cost savings from the initiative, coupled with supply chain reorganisation, to off-set inflationary pressures, increase marketing investment and deliver sustainable earnings growth.

Of the initiative CEO Gary Rodkin said: “I am pleased with our progress on cost savings and on completing the divestitures outlined last March. Rapid implementation of the divestiture programme allows us to focus on further cost-reduction opportunities earlier than originally expected. We will allocate an increasing portion of the savings toward high-quality marketing programs and investments in innovation, a process which will likely accelerate through the balance of fiscal 2007.”

Looking to the full year, ConAgra raised its outlook from previously predicted EPS of  $1.17 to EPS of $1.22.

“Today we have raised our expectations for fiscal 2007 EPS performance from continuing operations by $0.05 per diluted share based upon our confidence in the company’s ability to improve efficiencies. We will update investors periodically on how our operating initiatives and capital allocation decisions impact the fiscal 2007 outlook,” Rodkin commented.
ConAgra shares dropped slightly yesterday from an open of $24.20 to close at $23.68.