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ConAgra Q3 Profit Rises 26%, Backs Full Year Earnings View - Update


ConAgra Foods, Inc., (CAG) on Thursday said profit in the third quarter increased 26 percent from last year, as sales improved, helped by price increases. Adjusted earnings topped Wall Street view. The company continues to expect a modest growth in full year earnings.

Gary Rodkin, ConAgra's CEO, said, "Conditions have been difficult across the industry due to high inflation and soft volumes for retail consumer food brands. Our Lamb Weston potato business performed well, and we benefited from total margin management efforts that include price increases in both operating segments and good overall cost savings."

Net income attributable to the company increased to $271.6 million from $214.8 million. Earnings per share rose to $0.65 from $0.50. Income from continuing operations was $0.52 per share last year.

The latest results included a $0.14 per share benefit, among others, related to the acquisition of the majority interest in Agro Tech Foods, Ltd. The prior year included a gain and a benefit related to unallocated mark-to-market impact of derivatives, among other items.

Adjusted earnings from continuing operations improved to $0.51 per share from $0.50 per share. On average, 13 analysts polled by Thomson Reuters expected earnings of $0.49 per share for the quarter. Analysts' estimates typically exclude special items.

Net sales improved 7.4 percent to $3.37 billion from $3.14 billion. Analysts expected revenues of $3.35 billion.

Sales grew 4 percent in the Consumer Foods segment to $2.16 billion, reflecting a 5 percent contribution from favorable price/mix and a 4 percent contribution from recent acquisitions. Organic volume dropped 5 percent owing to challenging industry conditions and the company's recent price increases. Brands such as ACT II, PAM and Peter Pan saw sales growth in the quarter.

In the Commercial Foods Segment, sales increased 14 percent to $1.22 billion. The business benefited from commodity-driven price increases and increased volumes for the Lamb Weston potato operations, as well as the pass-through of higher wheat costs in the milling operations.

For the fourth quarter, the company expects modest year-over-year growth in earnings. The improvement is anticipated to result from continued momentum with potato products in the Commercial Foods segment and an expected slowdown in the rate of inflation in the Consumer Foods segment. Wall Street expects earnings of $0.54 per share for the quarter.

For the full year, the company still expects adjusted earnings per share to grow in a low- to-mid-single-digit rate compared to $1.75 earned in fiscal 2011. Analysts look for earnings of $1.79 per share.

CAG closed on Wednesday at $26.36, up from the prior close of $26.31, on 2.71 million shares.

by RTTNews Staff Writer

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