010656 ConAgra 4th Quarter Earnings, Outlook for 2002June 29, 2001Omaha, NE - ConAgra Foods, Inc., one of the world's largest branded food companies, reported diluted fourth quarter EPS of $.23 for the period ending May 27, 2001. Fourth quarter sales improved 5% to $6.4 billion and operating profit totaled $405 million. For fiscal 2001, sales grew 7% to reach $27.2 billion, operating profit totaled $1.9 billion, and diluted EPS was $1.33 before the cumulative effect of a change in three accounting principles. After the cumulative effect of a change in three accounting principles, the company's diluted EPS was $1.24. For fiscal 2001, diluted EPS was greater than fiscal 2000 diluted EPS of $.80, but below fiscal 2000 diluted EPS of $1.60 excluding restructuring and related charges. The company noted that weak economic conditions and higher energy prices impacted profitability for all reporting segments. Bruce Rohde, chairman and chief executive officer, commented, “We faced a difficult business environment in the last half of fiscal 2001. But even in the midst of a challenging year, we aggressively laid the foundation for a stronger future by improving operating efficiency, introducing new products, and investing behind our market positions. ConAgra Foods has the potential to be much more profitable. We are taking deliberate steps to ensure that end, and barring any unforeseen economic setbacks, we expect to see marked improvement in fiscal 2002.” In the review of results for the fourth quarter and fiscal year 2001 which follows, unless otherwise indicated, comparisons are with the corresponding periods of fiscal 2000, and exclude restructuring and related charges in fiscal 2000. Food Business During the fourth quarter, sales for the company's food businesses (Packaged Foods and Refrigerated Foods reporting segments) grew 5% to $5.5 billion. Total food business operating profit declined to $372 million, versus $415 million in fiscal 2000. For all of fiscal 2001, food business sales grew 7% to $21.9 billion and food business operating profit was flat at $1.6 billion. Packaged Foods Fourth quarter sales for ConAgra's Packaged Foods segment grew 17% to $2.3 billion and operating profit was $276 million compared to $294 million in the fourth quarter of last fiscal year. These results reflect growth in the portfolio of shelf stable products, largely due to the acquisition earlier in the fiscal year of Chef Boyardee, Gulden's mustard, Bumble Bee tuna, and other brands, as well as a solid performance from the company's foodservice-focused businesses. For a variety of products, lowered inventory levels among trade customers impeded the quarter's sales and profit growth. Profitability was also impeded by significantly increased marketing investment, largely due to new products introduced earlier in the fiscal year as well as the company's emphasis on strengthening its market positions. For the full fiscal year, Packaged Foods sales increased 14% to $8.7 billion and operating profit grew 5% to $1.1 billion. As previously mentioned, several new products for the company's shelf-stable grocery and frozen foods operations were introduced during the year to serve customers better and to boost sales growth in future periods. For strategic reasons, the company is committed to investing in market positions, new products, and service capabilities for the retail and foodservice channels. Refrigerated Foods For the quarter, Refrigerated Foods sales declined 2% to $3.3 billion and operating profit decreased to $97 million from $121 million in the fourth quarter of fiscal 2000. Sales of branded processed meats increased, as did sales for the company's fresh poultry and pork operations. Profits for the entire segment declined due in part to increases in product costs. Sales of fresh beef declined as a result of eliminated capacity following a fire which destroyed the Garden City, Kansas plant earlier in the fiscal year. Operating profit for the company's fresh poultry and beef operations improved over that of the comparable period last year. For the full fiscal year, sales rose 3% to $13.2 billion and operating profit declined to $438 million from $491 million in fiscal 2000. The company also noted that fiscal 2000's favorable market dynamics produced very strong margins for fresh beef and pork operations, which have affected comparisons for fiscal 2001. Going forward, the company will continue to aggressively explore opportunities to differentiate its meat offerings in the marketplace as part of a strategy to generate higher margins. Agricultural Products Business Fourth quarter sales for the Agricultural Products segment increased 4% to $899 million. Operating profit was $33 million, compared to $47 million in the fourth quarter of fiscal 2000. The company's Food Ingredients business posted a significant increase in profitability, as did the ConAgra Trade Group. The Agricultural Products segment showed lower profitability versus the fourth quarter last year due to declines in profitability for United Agri Products (UAP), which distributes crop inputs to growers. Decreased profitability for UAP represents a weaker mix of customer purchases and expansion-related expenses. For the full fiscal year, Agricultural Products sales rose 5% to $5.3 billion and operating profit totaled $281 million, down slightly from last year's operating profit of $283 million. Rohde commented, “Fiscal 2001 is behind us and we are working on fiscal 2002. While a disruptive economy and other factors affected our performance in the second half of this fiscal year, we made significant progress energizing some brands and businesses by laying a foundation for a stronger future. Like many companies in today's uncertain environment, we considered the last six months to be a period of adjustment and rebuilding. We used this period to make some changes to our business regarding product offerings, organizational structure, staffing, and accounting policies, and these changes should better position us in the marketplace. We think that next year will yield strong single-digit earnings growth, or perhaps double-digit earnings growth, depending on developments in the economy. We look for market conditions to snap back, but we are also looking rigorously at all possibilities for improving the short-term and long-term profitability. Given the strong performance of our business in the first half of fiscal 2001, we expect year-over-year percentage gains to be seen in the second half of fiscal 2002 rather than in the first half. We look forward to reporting to you on our progress.” The company has posted a question and answer document relating to this release, and its June 22 press release discussing restated financial statements and changes in accounting principles, on its website at www.conagrafoods.com/investors . ConAgra Foods, Inc. is North America's largest foodservice manufacturer and second-largest retail food supplier, with annual sales of approximately $27 billion. ConAgra Foods' consumer brands include: Hunt's tomato products, Healthy Choice, Banquet meals, Armour meats, Bumble Bee tuna, Louis Kemp seafood, La Choy, Chun King, Lunch Makers, Wesson, Country Pride, Blue Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender's, Cook's ham, Butterball, Act II, Slim Jim, Decker, Chef Boyardee, Orville Redenbacher's, PAM Cooking Spray, Snack Pack puddings, Van Camp's, Peter Pan, Hebrew National, Gulden's mustard, Pemmican Jerky, Swift Brown 'n Serve Sausages, Swiss Miss, and many others.
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