ConAgra Foods reports Q4 loss over pension accounting charge

ConAgra Foods has reported a net loss of $86.2m for its fiscal fourth quarter in 2012 compared to a net profit of $250.1m in 2011, as the company booked charges related to a change in accounting methods for its pension plans.

According to the packaged-food company, the changes have been made in the past quarter, ended 27 May 2012, to provide better transparency to its core business performance.

Excluding pension accounting changes, hedging items and other one-time charges, adjusted earnings from continuing operations were $0.51 per share, up from $0.47 per share a year ago.

Revenue increased 6.3% to $3.41bn, as the company passed the rising costs of raw materials to consumers through price increases.

ConAgra Foods chief executive officer Gary Rodkin said that despite the challenging business environment, the company has reported comparable year-on-year earnings per share growth for the fiscal fourth quarter, as planned.

In fiscal 2013, the company expects to overcome the impact of marketplace challenges and to post good growth in earnings, due to the pricing actions taken in fiscal 2012, contributions from completed acquisitions, and moderating inflation, Rodkin added.

The consumer foods division, which accounted for 63% of the company’s sales, posted a 6% growth in sales to $2.15bn, resulting from price increases and acquisitions, which in turn was offset by 5% decline in organic volume.

Operating profit decreased 26% to $270m, however, after adjusting $18m of net expense in the current quarter and $95m of net benefit in the year-ago period, the operating profit grew 7% of $288m.

The commercial foods segment, which sells potato products, seasonings and milled grain products to restaurants and other commercial channels, saw sales jump by 7% to $1.26bn, due to volume growth in the Lamb Weston potato business and the flour milling operations.

The unit’s operating profit increased 7% to $138m, driven by strong operations of the Lamb Weston business, favourable volumes and product mix, and improved operating conditions.

For the full financial year ended 27 May 2012, net sales increased by 7.8% to $13.26bn, compared to $12.3bn in 2011, while the net income declined by 42.1% to $474.4m, compared to $819.4m in 2011.

In fiscal 2013, the company expects adjusted earnings per share growth of 6% to 8% – about $1.95 to $1.99 per share, and operating cash flow in excess of $1.2bn.

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Image: ConAgra Foods reported a net loss in it fiscal fourth quarter due to charges related to accounting methods for its pension plans. Photo: ConAgra Foods.