ConAgra Foods, Inc. reported results for the fiscal 2011 third quarter ended Feb. 27, 2011. As reported, diluted earnings per share (EPS) from continuing operations was $0.50, a 2 percent increase over the $0.49 earned in the year-ago period. Diluted EPS from continuing operations increased 16 percent after adjusting for $0.06 per diluted share of net benefit in the year-ago period from items impacting comparability.
Gary Rodkin, ConAgra Foods' chief executive officer, said in a prepared statement, "We are pleased that fiscal third-quarter results demonstrate comparable EPS and segment operating profit growth, despite high input cost inflation and other challenging economic conditions. Sequential price/mix trends in our consumer foods segment are directionally improving as we expected. While inflationary pressures continue to build and difficult conditions persist, we expect our performance to continue to benefit from pricing actions under way, strong supply chain cost savings, and other profit-enhancing initiatives we have previously detailed. We are confident in our ability to post a low-single-digit rate of EPS growth over the comparable $1.74 earned last fiscal year."
The consumer foods segment posted sales of $2,085 million and operating profit of $263 million for the third quarter. Sales increased 2 percent as reported, reflecting flat organic volume and price/mix compared with a year ago, and approximately 2 percent benefit from acquisitions (net of divestitures).
Brands posting sales growth for the quarter included Banquet, DAVID, Healthy Choice, Hebrew National, Manwich, Marie Callender's, Peter Pan, Slim Jim, Wesson, and others.
Based on accelerating input cost inflation, the company has been implementing net pricing increases, which will be more apparent in future sales results.
Operating profit of $263 million was below $306 million in the year-ago period, as reported. After adjusting for $39 million of restructuring and asset impairment costs in the current period, as well as $14 million of gain from divesting the Luck's brand in the year-ago period, comparable current-quarter operating profit increased 3 percent. The profit performance reflects strong supply chain savings, lower advertising and promotion expense, and lower incentive compensation expense, which collectively offset significant inflation. The company is on track to deliver in excess of $275 million of cost savings in the consumer foods segment this fiscal year.
Sales for the commercial foods segment were $1,070 million, 7 percent above year-ago amounts. The sales increase reflects higher selling prices for the flour milling operations necessitated by higher wheat input costs, as well as volume growth for Lamb Weston specialty potato products.
Segment operating profit was $139 million, slightly below $143 million in the year-ago period as reported. After adjusting for $10 million of restructuring charges in the current quarter, comparable segment operating profit increased 5 percent. Lamb Weston benefited from improved potato crop quality, and has pricing and efficiency initiatives under way to address overall margin pressure. Flour milling profits increased from year-ago amounts due to favorable market conditions and effective margin management in a very volatile wheat market.
