ConAgra Results Hurt by Weakness in Consumer Brands
June 30 2016 - 9:10AM
Dow Jones News
ConAgra Foods Inc. reported a steeper-than-expected sales
decline in its latest quarter, dragged by weakness in consumer
brands as it continues to reshape its business.
Shares declined 3.4% to $46 in premarket trading.
The Omaha company—which makes Hunt's tomato sauce, Swiss Miss
hot chocolate and Peter Pan peanut butter—has like other
traditional food companies worked to transform itself in response
to shifting consumer preferences. ConAgra has sold its private
label business for $2.7 billion, plans to cut jobs as part of a
broad cost-cutting plan and is on track to spin off its Lamb Weston
frozen-potato line this fall.
As customers increasingly reach for more fresh and natural
foods, the company has developed a version of Peter Pan that is
free of artificial colors and preservatives, and it has introduced
an organic Hunt's ketchup.
In its most recent period, the company saw revenue in its
consumer foods segment fall 12% from a year earlier as volume
declined 4%. Its Banquet frozen meal line was a particular weak
spot, though ConAgra said price increases there helped profit
margins. Sales in its commercial foods segment, which includes Lamb
Weston, fell 6% from a year earlier.
ConAgra noted that an extra week in the year-ago period hurt
sales figures.
Over all, ConAgra reported a profit of $117.6 million, or 27
cents a share, down from $211.5 million, or 48 cents a share, a
year earlier. On a continuing operations basis, the company swung
to a per-share loss of 7 cents a share from a profit of 54 cents.
Adjusting for items including a pension expense and restructuring
costs, ConAgra earned 52 cents a share, down from 55 cents a year
earlier.
Revenue slid 9.5% to $2.83 billion, hurt by the extra week in
the comparable period.
Analysts projected 52 cents in adjusted earnings per share on
$2.98 billion in revenue, according to Thomson Reuters.
ConAgra said that before its Lamb Weston spin off this fall, it
would give financial projections for both companies.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
June 30, 2016 08:55 ET (12:55 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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