Fiscal 2014 First-quarter Highlights (% cited vs. year-ago period amounts, where applicable):
- Diluted EPS from continuing operations of $0.33 as reported and $0.37adjusted for items impacting comparability, down 46% as reported and down 16% on a comparable basis.
- Consumer Foods’ sales and operating profit declined on a comparable basis, reflecting soft volumes and significant investment in new products. Changes in merchandising and promotion support, as well as additional cost reduction activities, are under way to improve volume and profit performance as the fiscal year progresses.
- Commercial Foods’ sales were in line with year-ago amounts, and segment operating profit decreased, as expected, due to previously discussed customer transition issues at Lamb Weston potato products. The impact of the customer transition issues is expected to lessen as the fiscal year progresses.
- Ralcorp business performance is on track to contribute approximately $0.25of diluted EPS from continuing operations in fiscal 2014, adjusted for items impacting comparability. Long-term synergy expectations from Ralcorp remain unchanged at $300 million by fiscal 2017.
- Full-year diluted EPS is expected to be in the range of $2.34 - $2.38, adjusted for items impacting comparability. In terms of full-year EPS performance, the company expects a more favorable input cost environment, higher selling, general, and administrative (SG&A) cost savings throughout the remainder of the fiscal year, as well as some volume recovery in the second half of the fiscal year, to offset a portion of the EPS softness seen in the fiscal first quarter.
- Debt reduction and other capital allocation goals are unchanged.
ConAgra Foods, Inc., (NYSE: CAG) one of North America’s leading food companies, today reported results for the fiscal 2014 first quarter endedAug. 25, 2013. Diluted EPS from continuing operations was$0.33as reported for the fiscal first quarter, down 46% from$0.61in the year-ago period. Excluding$0.04per diluted share of net expense in the current quarter, and$0.17of net benefit in the year-ago period, from items impacting comparability, current-quarter diluted EPS from continuing operations of$0.37was 16% below the comparable$0.44earned in the year-ago period. Items impacting comparability are summarized toward the end of this release and reconciled for Regulation G purposes on page 10.
Gary Rodkin, ConAgra Foods’ chief executive officer, said, “Our first-quarterConsumer Foodsvolumes 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. 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.”
Consumer Foods Segment
Branded and non-branded food sold in retail and foodservice channels.
The Consumer Foodssegment posted sales of approximately$2 billionand operating profit of$186 million, as reported. Sales declined 2% as reported, which includes 2% contribution from acquisitions, a 3% organic volume decline, and a 1% decline in price/mix. The sales performance largely reflects difficult conditions for some of the company’s customers, as well as weak results for some categories (including frozen foods) negatively impacted by competitor promotional activity. Significant slotting and promotion related to new product launches weighed on price/mix; that level of concentrated, up-front investment will not be repeated this fiscal year. The company is in the process of revising its merchandising and promotion to improve volumes as the year progresses.
- Brands posting sales growth for the quarter include ACT II, Egg Beaters, Hunt’s, Reddi-wip, Rosarita, Swiss Miss, Van Camp’s, Wesson, and others. More brand details are in the Q&A document accompanying this release.