ConAgra 2nd-quarter earnings up 17.5 percent - Omaha.com
Published Thursday, December 19, 2013 at 8:02 am / Updated at 4:59 pm
ConAgra 2nd-quarter earnings up 17.5 percent

Private-brand sales of $1.1 billion — largely thanks to its acquisition of Ralcorp Holdings — contributed to a 17.5 percent increase in second-quarter earnings for ConAgra Foods.

The Omaha-based food manufacturer on Thursday reported a quarterly profit of $248.7 million, or 58 cents per share, up from $211.6 million, or 51 cents a share, a year ago, on revenue of $4.7 billion, up 26.5 percent.

Shares of ConAgra closed Thursday at $33.47, up 5.28 percent.

ConAgra CEO Gary Rodkin said earnings were stronger than anticipated, in part because retail stores beefed up inventory and ordered holiday inventory sooner than expected. Rodkin reaffirmed earlier annual earnings expectations of $2.34 to $2.38 per share, adjusted for items affecting comparability.

The quarter was a turn-around for ConAgra, which saw first-quarter profits drop 46 percent. Rodkin said the firm is still taking “corrective action,” including shifting some of its budget from advertising to in-store merchandising strategies and promotions. Despite the profit growth, Rodkin said some of the firm’s biggest brands are performing below expectations, including Chef Boyardee, Orville Redenbacher’s and Healthy Choice, weighing down growth in consumer foods volumes.

Rodkin said the firm is “more rigorously” addressing those brands but does not forecast much improvement in coming months. Instead, ConAgra is shifting resources to products that are growing. Those include Hunt’s and Ro-Tel tomatoes, Reddi-wip, Slim Jim and pot pies sold under the Marie Callender and Banquet brands.

“We have to fish where the fish are,” Rodkin said.

Some brands are more affected when consumers do not make “stock-up” trips to the grocery store, instead buying just what they need for the short term.

“The economy is still very tough for the vast majority of Americans,” Rodkin said, mentioning a “Wall Street-Main Street gap.”

Rodkin did not offer details, but said ConAgra has been working with retailers to help them adjust to shopping patterns that have changed because of cuts in SNAP food stamp benefits that took effect Nov. 1 when a temporary benefit increase, enacted during the recession, expired.

Total consumer foods sales were flat at $2 billion.

ConAgra this quarter retooled the way it classifies its business, now reporting three segments: consumer, commercial and private brand.

“The new segments represent how we think about and manage our business,” Rodkin said.

Private brand sales were up more than $900 million in the second quarter. Most of the former Ralcorp business is included in this segment. ConAgra bought Ralcorp in January for almost $5 billion.

ConAgra in the second quarter launched a new sales team structure within private brands, hoping to become a “strategic partner” for supermarkets and other retailers. The private brands group has had “positive” meetings with customers and is at work on developing new products for them, Rodkin said. It’s taking longer than expected to recover sales volumes that declined as a result of changes Ralcorp made before the acquisition, Rodkin said, but he called private brands a “catalyst for growth” in the long term.

In the commercial foods category, sales increased 3.1 percent to $1.6 billion while operating profits fell. The Lamb Weston potato business is still working to recover from the loss of a sizable food service customer, and problems with the potato crop are hurting manufacturing costs and margins.

Contact the writer: Barbara Soderlin

barbara.soderlin@owh.com    |   402-444-1336

Barbara Soderlin covers food safety, ConAgra, technology and employment/unemployment issues.

USDA official tours Waverly ranch as disaster assistance program begins
Jon Barker replaces Hayneedle co-founder Doug Nielsen as chief executive
Technology – including Google Glass – gets a try-on at Omaha Infotec conference
GROW Nebraska plans entrepreneurship conference
Google applies for patent for camera in contact lens
Caterer's move to downtown Omaha warehouse means new jobs, event center
Crew working to disassemble International Nutrition plant
Six nonprofits benefit from Walmart grants
New Hastings business helps your personal history live on
Alibaba stake fuels Yahoo stock’s rise
Business digest: Big banks might need to hold more capital, Yellen says
18-year-old's fashion-design company wins Maverick Business Plan Competition
In brief: Zebra to spend more than $3 billion on Motorola business
Union Pacific's ‘Big Boy’ locomotive takes the road back to life
Heinz offers buyouts to all Pittsburgh workers
SBA loan activity up in Nebraska
Banker leads Omaha branch's 'Happy' dance video
5 things to know about tax day
Warren Buffett, Charlie Munger 'fiesta ducks' on sale at Berkshire meeting
Nebraska Crossing Outlets stores, layout
West Corp. deal to expand its alert business
Tech talent, tax incentives help lure MindMixer to Kansas City
The Record: Bankruptcies, April 15
More have had personal information stolen
In brief: Retail sales gain is best since 2012
Deadline Deal thumbnail
Shoreline Golf Club
$40 for 2 Players, 18 Holes of Golf with Cart ($85 Value)
Buy Now
< >
SPOTLIGHT »
Inside Business
To submit an announcement for "Inside Business", click here. For questions call (402) 444-1371 or e-mail announcements@owh.com.
WORLD-HERALD ALERTS »
Want to get World-Herald stories sent directly to your home or work computer? Sign up for Omaha.com's News Alerts and you will receive e-mails with the day's top stories.
Can't find what you need? Click here for site map »