ConAgra Foods, Inc. reported results for the fiscal 2012 fourth quarter ended May 27, 2012. Due to an accounting change, the fourth quarter fiscal 2012 loss per share from continuing operations was $(0.21) as reported, down versus fiscal 2011 fourth-quarter reported EPS of $0.61. After adjusting for $0.72 of net expense in the current quarter, and $0.14 net benefit in the year-ago period, from items impacting comparability, diluted EPS of $0.51 from continuing operations in the fiscal 2012 fourth quarter increased 9 percent versus the comparable $0.47 in the year-ago period.
Gary Rodkin, ConAgra Foods’ chief executive officer, commented in a prepared statement, “Although the business environment remains challenging, we posted comparable year-over-year EPS growth for the fiscal fourth quarter, as planned. The consumer foods segment posted comparable year-over-year profit growth for the fiscal fourth quarter due to contribution from acquired businesses, moderating inflation, and progress with pricing and other margin management initiatives. This represents a significant turning point in the year-over-year profit comparisons for this segment given the industry conditions that have weighed on this segment’s results over the past several quarters. In the commercial foods segment, the Lamb Weston potato operations continued to post strong growth in sales and profits, demonstrating momentum that we expect to continue into fiscal 2013.”
He continued, “As we look to fiscal 2013, we expect good earnings growth. We will lap the pricing increases taken in fiscal 2012, which should benefit the year-over-year organic volume performance for our consumer foods segment in the second half of the fiscal year. Contribution from acquisitions completed in fiscal 2012, momentum in our potato operations, moderating inflation, and strong margin management initiatives should allow us to overcome the impact of marketplace challenges.”
The consumer foods segment posted sales of $2,150 million for the fiscal fourth quarter, up 6 percent year-over-year; the sales increase reflects a 6 percent contribution from favorable price/mix, 6 percent contribution from acquisitions, and a 5 percent organic volume decline. The impact of foreign exchange weighed on sales growth by approximately 1 percent. The 5 percent organic volume decline reflects the difficult economic conditions that are impacting consumer purchasing behavior, as well as price increases taken earlier in the year. The Banquet brand drove a meaningful portion of the segment’s overall volume decline given the sizeable price increases taken earlier in the fiscal year for that brand.
Brands posting sales growth for the quarter include Act II, Chef Boyardee, DAVID, Healthy Choice, Lightlife, Manwich, Marie Callender’s, Peter Pan, Slim Jim, Wesson, and others.
Fiscal fourth-quarter sales for this segment include contributions from the recently acquired National Pretzel Co., Del Monte Canada, Odom’s Tennessee Pride, and pita chip operations of Kangaroo Brands. Fiscal fourth-quarter sales also include amounts for Agro Tech Foods, Ltd., of India, in which the company recently increased its ownership to a majority interest and which the company now consolidates for financial statement reporting purposes.
Operating profit of $270 million decreased 26 percent from $364 million in the year-ago period, as reported. After adjusting for $18 million of net expense in the current quarter and $95 million of net benefit in the year-ago period from items impacting comparability, current-quarter operating profit of $288 million grew 7 percent over $270 million in the year-ago period. As expected, a combination of contributions from acquisitions, pricing actions, and other margin management initiatives more than offset the impact of lower volumes and inflation. While the quarter’s inflation rate of 6 percent was still challenging, it has moderated from the double-digit rates seen in quarters earlier this fiscal year.