001254 Conagra Earnings Match Estimates

Omaha, NE - ConAgra Foods Inc., the second-largest U.S. food maker, said that fiscal second-quarter earnings rose 61%, meeting market estimates, as recent acquisitions helped boost sales.

The company, whose brands include Butterball, Armour and Healthy Choice, earned $301.7 million, or 58 cents a share, in the quarter ended Nov. 26, compared with $187.3 million, or 39 cents, a year ago. Those results matched the average of a recent poll of analysts by First Call/Thomson Financial, which tracks earnings.

ConAgra attributed the bulk of its profit gains to the purchase of product lines such as Chef Boyardee, PAM Cooking Spray, Gulden's and Bumble Bee, as well as gains in efficiency.

Sales rose 8% to $7.2 billion from $6.7 billion. Packaged foods led the gains, helped by shelf-stable grocery products added from ConAgra's recent International Home Foods acquisition, rising 16% to $2.4 billion. Operating profits for the unit rose 29% to $398 million.

Some analysts, however, were expecting more growth from continuing operations.

“I was a little disappointed with the flat internal growth numbers,” said Prudential Securities analyst John McMillin. “It looked like all their volume growth came from acquisitions. They're spending more on marketing and I'm sure it will eventually pay off. But there's no evidence it paid off this quarter.”

Sales in the company's refrigerated foods unit rose 6% to $3.4 billion, while operating profit increased 9% to $154 million, helped by improved profitability in poultry operations and efficiency gains, the company said.

Agricultural products posted a 1% sales gain to $1.4 billion, while operating profit improved 33% $140 million, helped by better margins.

Conagra said in a prepared statement that it was targeting double-digit earnings-per-share growth over the long term and that it was “certainly on track” to achieve this goal.

In the fiscal third quarter, Conagra said it expects higher marketing costs due to the introduction of new products. Consequently, it is expecting a large portion of its second-half earnings growth to occur in the fourth quarter.

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