ConAgra plans more acquisitions after profit jumps
NEW YORK (AP) — ConAgra Foods Inc. said Thursday that its profit more than doubled in the fiscal first quarter as it added to its roster of brands and benefited from one-time investment gains.
The Omaha, Neb.-based maker of Banquet, Chef Boyardee and Marie Callender's raised its dividend and earnings outlook for the year, sending its shares up more than 6 percent.
CEO Gary Rodkin noted that results for the quarter were boosted by the company's numerous acquisitions over the past year. In keeping with its "strategic roadmap," he said the ConAgra will continue to add to its stable of products as opportunities arise.
ConAgra also said that its costs for ingredients are easing, suggesting sales volume could improve as the year progresses. Like other packaged food companies, ConAgra's sales volume has suffered as it hiked prices to make up for rising commodity costs. That has been a particularly tricky task at a time when consumers are watching their spending carefully.
For the three months ended Aug. 26, ConAgra said it earned $250.1 million, or 61 cents per share. That's compared with $93.8 million, or 22 cents per share, a year ago.
The results included a gain of 20 cents per share related to derivatives, which the company uses to hedge against swings in commodity costs.
Not including one-time items, ConAgra earned 44 cents per share. Analysts on average expected a profit of 35 cents per share.
Revenue in the quarter rose 7 percent to $3.31 billion, which was above the $3.24 billion Wall Street expected. The increase was boosted by the additions of National Pretzel, Odom's Tennessee Pride, Del Monte Canada, Kangaroo Brand Pita Chips.
Toward the end of the quarter, ConAgra also acquired Bertolli and P.F. Chang's Home Menu frozen meals.
The consumer foods segment, which accounts for roughly two-thirds of ConAgra's business, saw an 8 percent increase in sales as acquisitions and price hikes offset a decline in volume for existing brands.
Among the brands that posted gains were Marie Callender's, Orville Redenbacher's, Reddi-wip and Slim Jim.
ConAgra said that inflation for ingredient costs in its fiscal 2013 is expected to be lower than previously planned. That will ease the price hikes it passes on to consumers, which should result in better sales volume.
Sales for commercial foods unit, which primarily supplies restaurants with French fries, posted a 5 percent gain.
For the year, ConAgra now expects adjusted earnings of $2.03 to $2.06 per share, up from its previous forecast of $1.95 to $1.99 per share.
The company increased its dividend by a penny to 25 cents per share, starting with the payment to be made in December.