US food group ConAgra Foods has booked a drop in quarterly profits as higher costs outweighed an increase in sales.
ConAgra yesterday (20 September) reported a 41.7% drop in net profit to US$85.3m in the first quarter of its financial year. The company’s operating profit in the three months to 28 August was $293.7m, a drop from $320.8m in the same period in 2010. Earnings per share was down 38% to $0.29, adjusted for items impacting comparability.
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Sales from ConAgra’s consumer foods division increased 4% to $1.89bn despite flat volumes. However, the segment’s operating profits declined slightly, reflecting inflation of 11%, which the company said “offset strong cost savings and the benefit of pricing”.
ConAgra’s commercial food unit saw sales increase by 18.9% to $1.18bn, although profitability decreased as the company moved to a new wheat crop.
CEO Gary Rodkin said: “Despite a very challenging environment and high inflation, we delivered accelerating price/mix contribution and robust cost savings. We took pricing actions in the first quarter in both of our operating segments, and more pricing actions will soon be implemented in both segments. Our EPS goal for the full year remains unchanged.”
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