ConAgra Foods said yesterday (23 March) that its third quarter was hit by a series of charges relating to strategic actions to improve long-term performance, leading to a diluted loss per share of US$0.06. This compares to diluted earnings per share of $0.32 for the third quarter of 2005.
The company said that the loss included $0.43 per share of net expenses from significant impairment charges, restructuring charges associated with implementing cost-savings programmes, and litigation charges. Excluding the $0.43 per share of net expense, third-quarter diluted EPS was $0.37.
“Although the underlying operating performance in the third quarter met our overall expectations, our fundamentals still need to be much stronger,” said Congra’s president and chief executive officer Gary Rodkin. “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.”
The company said that during the quarter, sales for the its retail products segment increased by 3% to $1.7bn, reflecting volume growth of 4%.
The retail products segment operating profit for the quarter was $248m, which includes a $23m restructuring charge related to programmes designed to reduce the company’s ongoing operating costs.
Sales for the foodservice products segment grew by 4% to $561m, reflecting volume growth of 1%. Segment operating profit was $41m in the third quarter, which includes $18m of restructuring charges related to programmes designed to reduce the company’s ongoing operating costs.
Sales for the food ingredients segment were $657m, an increase of 8%; the increase reflects higher commodity prices and higher selling prices for wheat flour and dehydrated vegetable products. Segment operating profit was $71m.
As previously stated, the company expects total earnings per share (from continuing and discontinued operations combined) in the second half of fiscal 2006 to exceed that of the second half of fiscal 2005, excluding items that impact comparability.
“Earnings excluding items that impact comparability for the second half of fiscal 2006 are not expected to be significantly impacted by the major operating initiatives that will shape operating results in fiscal 2007 – specifically the dilution from the operations that will be divested, increased marketing investment, and the benefit of aggressive supply chain and general and administrative cost-savings programmes,” the company said. “As discussed last week, those initiatives are expected to result in a lower earnings base for fiscal 2007.”