DOW JONES NEWSWIRES ConAgra Foods Inc.'s (CAG) fiscal second-quarter earnings fell 14% after being hit with hedging losses. The packaged-food company also reported its consumer-foods unit was hurt by rising commodities costs. However, its smaller commercial foods segment saw better-than-expected profit growth and adjusted earnings beat analysts' expectations. Chief Executive Gary Rodkin said ConAgra was encouraged by its progress in fighting higher costs in the consumer-foods segment and that weaker volume was largely as-expected given continuing price increases. The company remains cautious as a result of continuing inflationary pressures and the economy's impact on consumers, Rodkin said. Sales in ConAgra's consumer-foods unit, its biggest by revenue, were up 4% though volume declined 1% and operating profit was down 8%. The smaller commercial-foods segment's sales climbed 16%, reflecting success at passing on higher wheat costs and higher operating costs at its Lamb Weston potato operations through higher prices. Operating profit increased a better-than-expected 26%. For the quarter ended Nov. 27, ConAgra reported a profit of $171.8 million, or 41 cents a share, down from $200.9 million, or 45 cents a share, a year earlier. Excluding hedging costs and other items, earnings from continuing operations were 47 cents. Revenue increased 8.1% to $3.4 billion. Analysts polled by Thomson Reuters most recently forecast earnings of 43 cents on revenue of $3.33 billion. Gross margin fell to 22.3% from 24.2% on higher costs. ConAgra has been on the hunt for strategic deals to improve its position in international markets, private-label foods and other branded food categories after giving up its pursuit of Ralcorp Holdings Inc. (RAH) in September. The maker of brands such as Healthy Choice, Slim Jim and Reddi-wip in recent months has increased its stake in Agro Tech Foods Ltd. (500215.BY) and agreed to acquire National Pretzel Co. Shares of ConAgra, which affirmed its guidance for the current fiscal year, closed Monday at $25.17 and were inactive premarket. The stock is up 11% this year. -By Tess Stynes, Dow Jones Newswires; 212-416-2481; Tess.Stynes@dowjones.com
