Speaking at the Consumer Analyst Group of New York, ConAgra Foods CEO Gary Rodkin said that the company expects the nationwide recall of peanut butter will cost between US$50m and $60m, the impact of which will be felt in the third quarter.
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Last Wednesday (14 February) ConAgra announced the recall of Peter Pan and Great Value peanut butter produced in its manufacturing facility in Georgia after the US Centres for Disease Control and Prevention (CDC) linked the peanut butter to a large-scale outbreak of salmonella, which has affected nearly 300 people since August. The plant, located in Sylvester, Ga, has been closed while the investigation continues.
The company said that the recall is likely to cost $0.06 to $0.08 per share and will drag its fiscal 2007 results to the lower end of its recent forecast. In December, ConAgra had forecast earnings of $1.28 to $1.33 per share.
Rodkin said more details of the cost of the recall will become available on 22 March, when ConAgra releases its third quarter results.
Following the presentation, shares in the food group rose 1.2% from an opening value of $25.86 to close at $26.25 on the New York Stock Exchange, having experienced a slight downturn last week after the recall.
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By GlobalDataDuring his presentation, Rodkin focused on ConAgra’s reorganisation plan, which was announced a year ago. He said that between 2008-10 ConAgra anticipates improved margins as a consequence of cost cutting measures and divestures. With increased focus on more profitable brands, Rodkin predicted that ConAgra’s sales will grow 2-3% annually, while earnings per share are expected to increase 8-10% annually.
