ConAgra Sees Charge From Peanut Butter Recall
ConAgra Foods will take a charge of $50 million to $60 million in the current quarter related to its peanut butter recall, the company said on Tuesday.
It also forecast annual growth of 8% to 10% in earnings per share in fiscal 2008 through 2010.
The announcement of the charge, which works out to 6 cents to 8 cents a share, comes less than a week after ConAgra recalled its Peter Pan brand peanut better and the Great Value
brand peanut butter it makes for Wal-Mart Stores due to possible contamination with the salmonella bacteria.
ConAgra, which also makes Healthy Choice meals and Swiss Miss hot chocolate, said its previous 2007 earnings guidance of $1.28 to $1.33 a share, excluding special items, would need to be adjusted downward for the impact of the recall.
However, even including the recall charge, 2007 earnings will likely still be toward the low end of the $1.28 to $1.33 range because several units are performing better than planned,
The Omaha, Nebraska-based food company said it would have more details about the financial impact of the recall when it reports fiscal third-quarter results on March 22.
For fiscal 2008 through 2010, ConAgra forecast 2% to 3% annual sales growth and 8% to 10% earnings per share growth, excluding special items.
ConAgra said it expects profit margin to expand and return on invested capital to improve during the 2008-2010 period.
At least three lawsuits have been filed against ConAgra by people who say they became sick after eating the company's peanut butter.
The company has not commented on the lawsuits except to say consumer safety is its top priority.
All of the jars of peanut butter involved have a product code on the lid beginning with '2111,' which denotes the plant. ConAgra said customers may return the lids or full jars of peanut butter to the store where they bought them for a refund.
Salmonella sickens about 40,000 people a year in the U.S. and kills about 600. It can cause diarrhea, fever, dehydration, abdominal pain and vomiting.