ConAgra Profit Up 15%, Aided by Commodity Trading
ConAgra Foods on Thursday posted a 15 percent increase in quarterly profit, as results in its trading and merchandising and food and ingredients segments overshadowed the cost of a pot pie recall.
But profit in the key consumer foods segment, which makes up more than half of the company's sales, fell 16 percent as ingredient costs jumped. Shares were down in early trading.
The decline in that segment could be worrisome to investors as it represents the part of the business where Chief Executive Gary Rodkin, who joined ConAgra from PepsiCo more than two years ago, should be able to most bring his marketing expertise to bear.
"Gary Rodkin was not lured from PepsiCo to trade energy futures," Pablo Zuanic, analyst at JP Morgan, said in a research note ahead of the earnings report.
ConAgra, maker of Healthy Choice meals, Chef Boyardee pasta and Hunt's ketchup, said profit was $244.8 million, or 50 cents a share, in the second quarter ended Nov 25, compared with $213.3 million, or 42 cents a share, a year earlier.
Excluding costs from the recall of Banquet pot pies, earnings were 53 cents a share, compared with the average analyst estimate of 43 cents a share, according to Reuters Estimates.
The pot pies were recalled Oct. 11 due to salmonella contamination. After a review of the plant where they were made, the company resumed shipping pot pies earlier this month.
Sales rose 13.7 percent to $3.51 billion. On Dec. 5, ConAgra said second-quarter earnings from continuing operations would be higher than planned due to a stronger-than-expected performance in its trading and merchandising segment and the food and ingredients segment.
For all of fiscal year 2008, ConAgra raised its earnings forecast, saying it now expects earnings to come in slightly above $1.55 a share, excluding one-time items. Analysts on average forecast $1.53 a share, according to Reuters Estimates.
The company previously forecast $1.48 a share.