000709 ConAgra Reports Earnings Increase

Omaha, NE - Multifoods giant ConAgra Inc. reported a 14 percent increase in fourth-quarter earnings, meeting Wall Street expectations.

ConAgra said that operating profits for the quarter ended May 28 were $501 million, or 46 cents per share, up from $439 million, or 41 cents per share, in the year-ago quarter.

Analysts surveyed by First Call/Thomson Financial pegged earnings at 46 cents per share.

Including $385 million in restructuring costs, the company posted a net loss of $19.5 million, or 4 cents per share. The loss was far narrower than the year- ago quarter, when ConAgra lost $141.3 million, or 30 cents per share, driven by $441 million in restructuring charges.

Sales increased 6 percent to $6.39 billion from $6.01 billion in the year- ago quarter.

With the release of the financial results, ConAgra declared its billion- dollar restructuring plan, Operation Overdrive, completed at least 11 months ahead of schedule and about $140 million below projected costs.

Announced in May 1999, Operation Overdrive included cutting 6,700 jobs and closing at least 15 plants.

The restructuring initiative included getting ConAgra's 80,000 employees in more than 80 operating companies to share customers, knowledge and products across company lines, with hopes of saving $600 million a year.

ConAgra owns companies across the food chain, including meatpacking businesses and brand names like Butterball, Orville Redenbacher, Peter Pan and Healthy Choice.

It was hit hard in 1998 when a glut of beef, pork, poultry and grains flooded commodity markets and financial problems in Asia closed doors to exports. ConAgra found that its inefficiencies cost the company, and its annual earnings growth per share dropped to 1.5 percent in fiscal 1998.

Determined to get back to the annual earnings growth target of 14 percent per share the company had set in 1975, chairman and chief executive Bruce Rohde responded with the restructuring plan. He credited that plan Thursday with helping bring in higher profits in 2000.

Demand for its products also has risen, ConAgra said, as it reported a 3 percent increase in annual sales to $25.4 billion from $24.6 billion in 1999.

“Operation Overdrive allowed us to do much more than restructure,” Rohde said. “We have made fundamental changes in our business strategy and have become a more customer-focused, value-added leader in the food industry. The breadth of our product lines and our focus on customer channels make us a supplier of choice for our trade customers. This should enhance our financial performance over the next several years.”

Part of ConAgra's long-term plan is buying more companies, which has been a hallmark of the Omaha-based food conglomerate.

Earlier this month, ConAgra announced it was buying International Home Foods Inc., the maker of Chef Boyardee pasta products, Pam cooking spray and Gulden's Mustard, for $1.6 billion in cash and stock.

For the year ended May 28, ConAgra said net income, including restructuring costs of $621 million, was $413 million, or 87 cents per share, up 15 percent from $358 million, or 76 cents per share, in fiscal 1999.

Excluding restructuring costs, net income for fiscal 2000 was $798 million, or $1.67 per share, compared with $696 million, or $1.46 a share in 1999, ConAgra said.

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