Filed under: Earnings, Consumer Goods, Food & Beverage, Products
NEW YORK — ConAgra reported a third-quarter profit that fell shy of Wall Street expectations as the maker of Chef Boyardee and Hebrew National hot dogs booked charges related to its acquisition of Ralcorp and struggled to grow sales for its existing brands.
The Omaha, Neb.-based company had announced last year that it was buying Ralcorp Holdings, which makes store- brand products such as cookies and pretzels for retailers including Kroger, Target and Whole Foods. ConAgra noted at the time that such products are gaining popularity in the U.S. as supermarkets and drug store chains improve their offerings as a way to cultivate shopper loyalty.
The deal, which closed on Jan. 29, made ConAgra Foods Inc. (CAG) the nation’s biggest producer of store brands.
In its consumer foods segment, ConAgra said sales rose 7 percent in the quarter as a result of acquisitions and a more favorable mix of prices and packages. But sales volume for existing brands declined 3 percent. The company’s other brands include Hunt’s ketchup, Slim Jim and Marie Callender‘s frozen meals.
In the commercial food segment, which provides goods to restaurant chains and other outlets, sales rose 1 percent. The company noted that its Lamb Weston potato unit benefited from higher prices, which offset a volume decline that resulted primarily from softness in Asian markets.
For the three months ended Feb. 24, ConAgra said it earned $120 million, or 29 cents. That’s down from $280.1 million, or 67 cents a share, in the year-ago period.
Not including one-time items, the company said it earned 55 cents a share. Analysts on average expected a profit of 56 cents a share.
Revenue rose 13 percent to $3.85 billion, which was also shy of the $3.9 billion that Wall Street expected.
Its shares were down more than 3 percent at $34.30 in premarket trading.
ConAgra stood by its full-year guidance of adjusted net income of $2.15 a share, representing a 17 percent increase from the previous year. The forecast includes a 5-cents-per-share benefit from its acquisition of Ralcorp. Next year, the company expects a 25-cents-a-share benefit from the acquisition.
Analysts expect annual earnings each share of $2.16.
The board also declared a regular quarterly dividend of 25 cents a share, payable May 31 to shareholders of record April 30.
%Gallery-183453%
