ConAgra Foods reports 42.3% decline in Q1 net profit

US-based ConAgra Foods has reported a 42.3% decline in net profit to $144.3m for the first quarter of 2014, compared with $250.1m for the same period in 2013.

The company attributed the decline in profit to a drop in sales from the consumer foods division, which sells meals, condiments, snacks and desserts, and a challenging industry environment.

For the quarter ending 25 August 2013, net revenues increased 27.2% to $4.2bn, compared with $3.3bn a year ago.

Segment-wise, the consumer foods division, which offers branded and non-branded food sold in retail and foodservice channels, posted a 1.8% drop in sales to $2bn, which includes a 2% contribution from acquisitions, a 3% organic volume decline, and a 1% decline in price/mix. The division’s operating profit declined 21% to $186m.

Brands including ACT II, Egg Beaters, Hunt’s, Reddi-wip, Rosarita, Swiss Miss, Van Camp’s, and Wesson achieved sales growth during the quarter.

The commercial foods segment, which sells potato products, seasonings and milled grain products to restaurants and other commercial channels, reported a slight drop in sales to $1.26bn, while operating profit declined 7% to $129.8m.

The Lamb Weston potato products’ sales and profits were lower compared with year-ago, as a major foodservice customer did not renew a sizeable amount of potato business.

Ralcorp businesses contributed a total of $942m in sales and $82m in operating profit in the quarter.

ConAgra Foods CEO Gary Rodkin said, "Our first-quarter consumer foods volumes were lower than planned due to category and customer challenges."

"We are revising our merchandising and promotion plans to improve our volume, and we have already begun additional SG&A cost management initiatives that should improve EPS performance as the fiscal year progresses," Rodkin added.

"We still expect to post good EPS growth this fiscal year, and we are confident in our long-term EPS growth and cash flow outlook as the sizeable synergies from Ralcorp are achieved over the next few years."

ConAgra Foods stated that it expects diluted EPS in the range of $0.55 for the second quarter, given the gradual nature of the anticipated recovery from the volume challenges.

For fiscal 2014, the company expects diluted EPS, adjusted for items impacting comparability, in the range of $2.34 – $2.38.

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Image: ConAgra’s Q1 profit was hit by a drop in sales from the consumer foods division and a challenging industry environment. Photo courtesy of ConAgra Foods, Inc.