Today ConAgra Foods (NYSE: CAG), one of the world’s largest packaged food companies, reported record first quarter sales and earnings for the period ending August 26, 2001. First quarter earnings were $.36 per diluted share, representing 44% growth over earnings of $.25 per diluted share in the first quarter of fiscal 2001. Sales increased 8% to reach $7.6 billion and operating profit improved 20% to $528 million. The company’s overall performance reflects strong food volume growth, a larger portfolio of value-added products due to the acquisition of several food brands late in the first quarter of fiscal 2001, and more favorable market conditions for some business units.
Bruce Rohde, chairman and chief executive officer, commented, “While our team is pleased with the quarter’s performance and confident that we will reach the goals we set for ourselves this fiscal year, our sympathies are with those who have been affected by the horrible and tragic events that took place in New York and Washington DC on September 11. Our thoughts and prayers are with families and colleagues of the victims as well as the rescue workers and other authorities who continue to work heroically in these extremely difficult circumstances. At the suggestion of our country’s president, our team has approached work this week with a new determination and fresh vigor to help keep America strong.”
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Results for the first quarter of fiscal 2001 included a $.09 charge per diluted share from the cumulative effect of changes in accounting principles; excluding this charge, earnings for the first quarter of fiscal 2002 increased 6%.
Food Business
The company’s food business (Packaged Foods and Refrigerated Foods reporting segments) showed substantial growth in sales and profits. Sales grew 11% to reach $5.6 billion and operating profit improved 30% to reach $407 million.
Packaged Foods
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By GlobalDataSales for the company’s Packaged Foods segment grew 32% to reach $2.2 billion and operating profit improved 31% to reach $265 million. Sales and profit growth reflect the acquisition of several branded food products late in the first quarter of fiscal 2001 as well as improving trends for several of the company’s large brands, including Hunt’s, Healthy Choice, Chef Boyardee, Marie Callender’s, Slim Jim, Act II, Bumble Bee, PAM, Parkay, and others. Enhanced marketing and new product investments made over several prior quarters contributed to the strong performance. This quarter’s performance also reflects significant progress with combined channel selling, in which the company bundles a selection of products as a group for major retail promotion themes or foodservice menu events.
While gains were achieved in many product groupings sold to retail consumers, recent economic factors negatively impacted the foodservice-focused business unit, which includes such products as french fries, specialty meats, seafood, and tortillas, during the quarter. Compared to its overall performance over the last several quarters, the foodservice-focused products generated a slower rate of sales and profit growth.
Refrigerated Foods
Sales for the Refrigerated Foods segment grew 1% to $3.5 billion and operating profit increased 29% to $142 million. Despite higher input costs, the company’s branded processed meats business posted solid profit growth. The company’s fresh pork business showed sales and profit gains due to more favorable marketplace conditions. The company’s poultry operations showed significantly increased profitability due to a better market environment for poultry products as well as operating improvements resulting from targeted efficiency projects. The company’s fresh beef operations showed levels of profitability that were strong due to similar targeted efficiency projects, but below last year’s levels due to less favorable marketplace dynamics during the quarter.
Agricultural Products
Sales for the company’s Agricultural Products segment remain unchanged at $2.0 billion, while operating profit declined 4% to $121 million. Profit trends for United Agri Products, the leading distributor of crop inputs and agricultural information services, showed improvement compared to those experienced in the second half of fiscal 2001, but were below the comparable quarter last fiscal year due to continuing difficult agricultural conditions. Profits for this business unit were negatively impacted in the quarter due to relatively weaker demand, a difficult pricing environment, and increased bad debts. Profits for the ConAgra Trade Group were slightly below those of the comparable quarter last year, while profits for ConAgra Food Ingredients, which includes milling and spice businesses, increased.
Bruce Rohde commented, “We are off to a good start for fiscal 2002, and remain slightly ahead of our original expectations for the year. Product, marketing, and operational investments made in prior periods, as well as more favorable operating environments for some of our businesses, are positively impacting our profits. Our team continues to strive for excellence in terms of optimally coordinating our sales, marketing, and manufacturing functions, which is key to our becoming the most efficient producer of quality and innovative consumer-driven items.”
Rohde continued, “We provide products that are essential to life. While the current economic environment is filled with uncertainty and may impose disruption in terms of where and what types of food people eat, we have variety across our product portfolio and strong channel representation that will serve our customers and shareholders well in these times. We continue to plan for overall single-digit EPS gains, with those gains apparent in the second half of the year.”
“As we have stated before,” Rohde said, “we expect the first half of this fiscal year, which ends in November of 2001, to reflect a modest year-over- year EPS decrease compared to reported earnings of $.80 during the first half of last fiscal year. Our projection for this modest decline has been consistent, based on both the current state of the economy as well as our strong performance for the comparable time period last fiscal year. However, during the third and fourth quarters of fiscal 2002, we are planning for EPS gains.”
Rohde noted that the company’s earnings expectations for fiscal 2002 are largely based on the continuation of the strategic focus on its value-added capabilities as well as attention to four main tactical areas:
1) Quality sales growth, which reflects increased presence in the value-
added side of the food business, improved communication with consumers,
and improved product taste,
2) Continuous improvement in the coordination of manufacturing, marketing,
and sales, which strengthens the overall effectiveness of the company’s
execution,
3) Service solutions for retail and foodservice customers, which is
largely the result of team and menu selling efforts, and
4) Working capital improvement.
He continued, “Our team is making progress with these initiatives, as our first quarter results illustrate. I look forward to reporting on our future success.”
ConAgra Foods, Inc. (NYSE: CAG) is one of North America’s largest foodservice manufacturers and retail food suppliers, with annual sales in excess of $27 billion. ConAgra Foods’ consumer brands include: Hunt’s tomato products, Healthy Choice, Banquet meals, Armour meats, Bumble Bee tuna, Louis Kemp seafood, La Choy, Chun King, Lunch Makers, Wesson, Country Pride, Blue Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender’s, Cook’s ham, Butterball, Act II, Slim Jim, Decker, Chef Boyardee, Orville Redenbacher’s, PAM Cooking Spray, Snack Pack puddings, Van Camp’s, Peter Pan, Hebrew National, Gulden’s mustard, Pemmican Jerky, Swift Brown ‘n Serve Sausages, Swiss Miss, and many others. For more information, please visit us at www.conagrafoods.com.
Note on Forward Looking Statements:
This news release contains “forward-looking” statements within the Private Securities Litigation Reform Act of 1995. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. Actual results may vary materially from the expectations contained in the forward-looking statements. Future economic circumstances, industry conditions, company performance and financial results, availability and prices of raw materials, product pricing, competitive environment and related market conditions, operating efficiencies, access to capital, actions of governments and regulatory factors affecting the company’s businesses are examples of factors, among others, that could cause actual results to differ materially from those described in the company’s reports filed with the Securities and Exchange Commission. The company is under no obligation to (and expressly disclaims any such obligation to) update or alter its forward- looking statements whether as a result of new information, future events, or otherwise.
- ConAgra Foods, Inc.
- Segment Operating Results
- (In millions)
FIRST QUARTER – 13 Weeks Ended
Percent
August 26, 2001 August 27, 2000 Change
SALES
Packaged Foods $2,196.7 $1,669.6 31.6%
Refrigerated Foods 3,451.4 3,432.5 .6
Agricultural Products 1,959.7 1,959.4 0.0
Total $7,607.8 $7,061.5 7.7%
OPERATING PROFIT*
Packaged Foods $265.0 $202.0 31.2%
Refrigerated Foods 141.5 109.7 29.0
Agricultural Products 121.3 126.5 (4.1)
Total $527.8 $438.2 20.4%
*Operating profit is before interest expense, goodwill amortization,
general corporate expense, and income taxes.
ConAgra Foods, Inc.
Consolidated Statements of Earnings
(In millions except per share amounts)
FIRST QUARTER – 13 Weeks Ended
Percent
August 26, 2001 August 27, 2000 Change
Net sales $7,607.8 $7,061.5 7.7%
Costs and expenses
Cost of goods sold 6,551.8 6,198.0 5.7
Selling, general and
administrative expenses 644.8 524.5 22.9
Interest expense, net 104.1 74.9 39.0
7,300.7 6,797.4 7.4%
Income before income
taxes and cumulative effect of
changes in accounting 307.1 264.1 16.3%
Income taxes 116.7 100.0 16.7
Income before cumulative
effect of changes in accounting 190.4 164.1 16.0
Cumulative effect of changes
in accounting (2.0) (43.9) 95.4
Net income $188.4 $120.2 56.7%
Income per share – basic
Income before cumulative effect
of changes in accounting $0.36 $0.34 5.9%
Cumulative effect of changes
in accounting – (.09) 100.0
Net income $0.36 $0.25 44.0
Weighted average shares
outstanding 524.6 478.7 9.6%
Income per share – diluted
Income before cumulative
effect of changes in accounting $0.36 $0.34 5.9%
Cumulative effect of changes in
accounting – (.09) 100.0
Net income $0.36 $0.25 44.0
Weighted average shares and
share equivalents outstanding 526.4 480.6 9.5%
ConAgra Foods, Inc.
Consolidated Balance Sheets
(In millions)
ASSETS August 26, 2001 August 27, 2000
Current assets
Cash and cash equivalents $25.9 $82.0
Receivables, net 2,450.8 2,302.6
Inventories 4,951.8 4,704.3
Other current assets 612.1 442.6
Total current assets 8,040.6 7,531.5
Property, plant and equipment, net 3,856.1 3,878.3
Brands, trademarks and goodwill, net 4,771.6 4,607.0
Other assets 395.5 412.9
Total assets $17,063.8 $16,429.7
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Notes payable $3,550.6 $3,536.6
Current installments of
long-term debt 122.9 20.6
Accounts payable 2,156.4 2,063.7
Advances on sales 223.9 172.7
Other accrued liabilities 1,687.2 1,405.8
Total current liabilities 7,741.0 7,199.4
Senior long-term debt, excluding
current installments 3,184.3 3,399.3
Other noncurrent liabilities 836.8 770.3
Subordinated debt 750.0 750.0
Preferred securities of a
subsidiary company 525.0 525.0
Common stockholders’ equity 4,026.7 3,785.7
Total liabilities and
stockholders’ equity $17,063.8 $16,429.7
