ConAgra Foods swings into profit in Q4 2013

US-based ConAgra Foods has achieved a profit of $192.2m in the fourth quarter of 2013, compared with a loss of $86.2m in the same period a year ago, when the company incurred charges related to a change in accounting methods for its pension plans.

For the quarter ending 26 May 2013, net revenues increased 33.7% to $4.5bn, compared with $3.4bn for the same period in the previous year, driven by the acquisition of private label food manufacturer Ralcorp.

Segment-wise, the consumer foods division, which offers branded and non-branded food sold in retail and foodservice channels, posted 7% increase in sales to $2.3bn, reflecting a 5% contribution from acquisitions, 3% organic volume growth, and -1% unfavorable impact from a combination of price/mix, while operating profit increased 8% to $291m.

Brands including Banquet, Hebrew National, Hunt’s, Marie Callender’s, Orville Redenbacher’s, PAM, Peter Pan, Ro*Tel, Rosarita and Wolf 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 4% rise in sales to $1.3bn, while operating profit increased 13% to $156m, due to a solid performance from the flour milling operations.

The Lamb Weston potato operations reported good sales and profit performance domestically. However, a lower performance in key Asian markets lead to a modest operating profit decline.

Ralcorp businesses contributed a total of $962m in sales and operating profit of $108m in the quarter.

For the full-year, ConAgra Foods reported 65.4% rise in net earnings to $773.9m, compared with $467.9m in 2012, while net sales increased 15.9% to $15.4bn, compared with $13.3bn in the previous year.

ConAgra Foods chief executive officer Gary Rodkin said: "Today we provided our current view of our strong near-term and long-term EPS growth potential, taking into account an increase in expected synergies from the recent Ralcorp transaction, as well as the benefit of our ongoing innovation, marketing, and margin management initiatives.

"As we look to the longer term, given the opportunities ahead of us, we expect to grow comparable EPS by at least 10% per year from fiscal 2015-2017; this is expected to result in five consecutive years of double-digit EPS growth, and EPS in excess of $3.00 per share in fiscal 2017."

For the fiscal 2014, the company expects diluted EPS, adjusted for items impacting comparability, to be approximately $2.4, to grow comparable EPS by at least 10% per year from fiscal 2015-2017.

In addition, the cost-related synergies resulting from the Ralcorp acquisition are expected to reach $300m of annual pre-tax benefit by fiscal 2017, compared with previous estimates of $225m.

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Image: For the fourth quarter ended 26 May 2013, ConAgra’s net revenues increased 33.7% to $4.5bn, driven by Ralcorp acquisition. Photo: courtesy of ConAgra Foods, Inc.