ConAgra Foods, Inc., reported results for the fiscal 2012 second quarter ended Nov. 27, 2011. Diluted EPS from continuing operations was $0.41, including $0.06 per diluted share of net expense from items impacting comparability. Adjusting for those items, diluted EPS from continuing operations was $0.47. For the same period a year ago, diluted EPS from continuing operations as reported and adjusted for items impacting comparability was $0.45.
Gary Rodkin, ConAgra Foods' chief executive officer, said in a prepared statement, "We are pleased with our progress in both operating segments. The quarter's higher-than-planned comparable EPS reflects strong double-digit operating profit growth for our commercial foods segment, which has successfully overcome difficult operating conditions and implemented pricing. We are encouraged by our progress in fighting inflation in the consumer foods segment; volumes for that segment have performed largely as expected given ongoing price increases. The marketplace environment remains difficult due to continuing inflationary pressures and the impact of the current economy on consumers, so we are cautious about business conditions. Our team is managing through these circumstances well by focusing on net price realization, productivity, and appropriate brand support, and we are confident in our ability to deliver our overall EPS and cash flow expectations for the fiscal year."
The consumer foods segment posted sales of $2,178 million for the fiscal second quarter, up 4 percent year-over-year due to price/mix contribution of 5 percent and a 1 percent volume decline.
Brands posting sales growth for the quarter include Banquet, Chef Boyardee, Hunt's, Marie Callender's, Orville Redenbacher's, PAM, Peter Pan, Reddi-wip, Rosarita, Slim Jim, Snack Pack, Swiss Miss, Van Camp's, Wesson, Wolf, and others.
Operating profit of $256 million was 8 percent below last year's $279 million, as reported. Restructuring charges of $15 million in the current quarter and $5 million in the year-ago period are included in reported results; adjusting for these amounts, current quarter operating profit of $271 million was 4 percent below the comparable $284 million in the year-ago period. In terms of operating profit impact, the combination of pricing and strong cost savings almost offset inflation of 10 percent this quarter; marketing investment was slightly higher, as planned.
The company is encouraged by its pricing progress to date, and remains cautious in its near-term outlook for this segment largely due to upwardly revised estimates for near-term inflation and the possibility of further volume impact given ongoing pricing initiatives. Largely reflecting the timing of inflation and marketing investments, the company expects this segment's second-half operating profit growth to occur in the fiscal fourth quarter.
Sales for the commercial foods segment were $1,226 million, 16 percent above year-ago amounts; the growth reflects the pass-through of higher wheat costs in the milling operations as well as price increases at Lamb Weston potato operations necessitated by high operating costs. The segment's sales performance also reflects volume growth for the major product lines.
The segment's operating profit increased 26 percent to $161 million, which was higher than planned. The segment's most significant profit improvement came from the Lamb Weston operations, which benefited from pricing actions taken over the last few months to address input cost inflation; Lamb Weston also benefited from operating efficiencies and volume growth. Sweet potato products for the foodservice channel and Alexia branded products in the retail channel continue to demonstrate momentum, helping drive favorable mix. The milling operations also posted improved profitability due to favorable market conditions, efficiencies and mix.
As previously communicated, the company expects this segment to post improved year-over-year profitability in the second half of the year.