ConAgra Foods reports 57.2% decline in Q3 net earnings

US-based ConAgra Foods has reported that its net earnings for the third quarter of 2013 declined by 57.2% to $120m, compared with $280.1m in the same quarter in 2012.

The sharp decline in net earnings was due to costs related to its acquisition of Ralcorp, although the move resulted in higher revenues.

Net sales in the quarter ended 24 February 2013 increased 13.4% to $3.85bn, compared with $3.39bn for the corresponding period in fiscal 2012, with Ralcorp contributing $292m in sales and $5m in operating profit.

On 29 January, ConAgra Foods completed the acquisition of Ralcorp; it continues to expect EPS benefit of approximately $0.05 per diluted share in fiscal 2013 from this transaction.

ConAgra Foods chief executive officer Gary Rodkin said the company is pleased with the earlier-than-planned closing of the Ralcorp transaction, sequential improvement in the Consumer Foods volumes, comparable profit growth in both of the core business segments, and the announcement of Ardent Mills, a new proposed joint venture for the company’s milling operations.

"Challenges remain for key areas of our business, but a combination of successful margin improvement initiatives and a more favourable input cost environment is enabling us to significantly increase our brand investment and deliver EPS growth."

Commenting on the ongoing integration of Ralcorp, Rodkin added: "We reaffirm our expected comparable EPS benefit of $0.05 in fiscal 2013 results and $0.25 in fiscal 2014 results, and are very excited about our earnings potential over the next few years."

The company’s consumer foods segment, which sells branded and non-branded foods to retail and foodservice channels, posted a 6.8% increase in net sales to $2.3bn, while operating profit for the segment declined 14.2% to $284.4m.

In the commercial foods segment, which sells potato products, seasonings, blends, flavours, and milled grain products to foodservice and commercial channels worldwide, the operating profit increased 11.1% to $166.6m, while sales increased 1.3% to $1.25bn.

During the quarter, marketing investment for the base business excluding recently completed acquisitions increased about 33%, reflecting the company’s planned commitment to build long-term brand strength and the flexibility afforded by improved margins.

ConAgra Foods reaffirmed the expectations for fiscal 2013 diluted EPS to be approximately $2.15.

ConAgra Foods, headquartered in Omaha, Nebraska, US, is one of North America’s leading packaged food companies.

The company’s brands include Banquet, Chef Boyardee, Egg Beaters, Healthy Choice, Hebrew National, Hunt’s, Marie Callender’s, Orville Redenbacher’s, PAM, Peter Pan, Reddi-wip and Snack Pack among others.

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Image: ConAgra Foods’ net earnings in the third quarter fell due to costs related to its acquisition of Ralcorp, although the move resulted in higher revenues. Photo courtesy of ConAgra Foods, Inc.