Shares in US food group ConAgra Foods climbed today (20 December) despite the company reporting a fall in quarterly and half-year profits.
ConAgra reported a 26% decrease in net income to US$257.1m for the six months to 27 November due to higher input costs and a hedging loss in the second quarter.
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The company’s operating profit fell 2.2% to $710.8m as profits from its consumer foods business dropped 6.9%.
Sales climbed 8.8% to $6.48bn thanks to higher revenues from consumer foods and its commercial foods divisions.
In the second quarter, ConAgra made a net income of $171.8m, a fall of 14.5% due in part to a hedging loss of $27m. Its operating profit increased 2.8% to $417.1m thanks to a jump in profits from its commerical foods business. Second-quarter profits from ConAgra’s consumer food division was down 8%. Sales increased 8.1% to $3.4bn amid growth in both businesses.
ConAgra’s diluted earnings per share from continuing operations of $0.41 as reported down 9%. Diluted EPS increased 4% to $0.47 when adjusted for items impacting comparability, which included the hedging loss and restructuring costs.
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By GlobalDataThe company called its diluted EPS result “stronger than planned”. CEO Gary Rodkin said it was due to double-digit growth in operating profit from its commercial foods division.
Rodkin said he was “encouraged” by the company’s “progress in fighting inflation” within its consumer food business. “Volumes for that segment have performed largely as expected given ongoing price increases,” he said.
However, he warned: “The marketplace environment remains difficult due to continuing inflationary pressures and the impact of the current economy on consumers, so we are cautious about business conditions.”
Nevertheless, Rodkin said ConAgra was “confident” aboout delivering on expectations for annual EPS and cash flow.
ConAgra shares were up 4.43% at $26.30 at 10:46 ET.
