ConAgra Raises Forecast as Earnings Exceed Expectations

ConAgra said last month that it would buy Ralcorp Holdings for $5 billion, to become the top American producer of private-label foods that stores brand as their own.

It said its full-year earnings forecast did not include any benefit from the purchase of Ralcorp. Consumer food brands ConAgra sells include Act II, Hebrew National, Marie Callender’s and Orville Redenbacher.

ConAgra has been increasing its presence in the private-label foods business, which often outpaces brand name food as consumer spending is squeezed by the lingering economic downturn.

This year ConAgra bought Odom’s Tennessee Pride, which makes breakfast sandwiches and sausage, and Kangaroo, which makes pita chips. It struck a deal in July to buy Unilever North America’s frozen meal business for $265 million.

ConAgra now predicts earnings of at least $2.06 a share for the 12 months ending May 13. It had forecast earnings of $2.03 to $2.06 a share for the period. Analysts on average were expecting $2.07 a share, according to Thomson Reuters.

The company, which is based in Omaha, predicted marketing investments would improve consumer food sales this year.

ConAgra’s profit rose to $211.6 million, or 51 cents a share, in the quarter ended Nov. 25, the company’s second fiscal quarter, from $180.2 million, or 43 cents a share, a year earlier.

Excluding items, the company earned 57 cents a share from continuing operations, topping Wall Street expectations by 2 cents.

“The results reflect the number of deals they have done over the past year,” said Erin Lash, a Morningstar analyst.

Sales rose 9 percent to $3.74 billion. Consumer foods sales rose 11 percent to contribute 64 percent to total revenue. Analysts on average had expected sales of $3.69 billion. Sales in the commercial foods business rose 5 percent, helped by strong sales at its Lamb Weston potato business outside the United States.

ConAgra’s shares closed at $30.16 on Thursday, up 0.7 percent, or 20 cents.

Article source: http://www.nytimes.com/2012/12/21/business/conagra-raises-forecast-as-earnings-exceed-expectations.html?partner=rss&emc=rss