Cereal maker Ralcorp Holdings, Inc. (RAH) Tuesday reported a sharply narrower loss for its fourth quarter, reflecting higher revenues and a prior-year loss from discontinued operations.
Separately, packaged foods company ConAgra Foods, Inc. (CAG) announced that it has agreed to buy Ralcorp Holdings in a deal valued at about $6.8 billion, including the assumption of debt. Ralcorp is the largest manufacturer of private label food in the U.S and its shares are up more than 26 percent in pre-market trading following the announcement.
In the fourth quarter, Ralcorp's net loss narrowed to $44.2 million or $0.80 per share from $424.1 million or $7.54 per share in the previous year. The prior year had a loss from discontinued operations totaling $8.05 per share.
Excluding acquisition-related amortization, adjusted earnings totaled $0.92 per share for the recent period, while it was $0.86 per share in the prior year.
On average, 12 analysts polled by Thomson Reuters expected earnings per share of $0.87 for the quarter. Analysts' estimates typically exclude one-time items.
Net sales for the quarter grew 8 percent to $1.07 billion, but came below analysts' estimate of $1.10 billion. Net sales grew due to acquisitions completed during fiscal 2012, primarily Refrigerated Dough and Petri, as well as higher net pricing in response to rising commodity costs, the company said. The Post cereals business operations are presented as discontinued operations.
Ralcorp stated that Cereal Products' net sales declined 11 percent due to a 13 percent fall in volume driven by the previously announced customer exit. Snacks, Sauces & Spreads posted net sales growth of 5 percent and Frozen bakery products net sales were up 37 percent from a year ago. Net sales from Pasta increased 3 percent from the preceding year.
Total sales volume increased 3 percent from last year.
For the fiscal 2012, the company posted net earnings of $73.4 million or $1.31 per share, compared to a net loss of $241.2 million or $4.32 per share in the prior year. Net sales grew 14 percent to $4.32 billion.
RAH closed Monday's regular trading at $70.23 on the NYSE. In the pre-market activity, the shares jumped 26.44 percent.
CAG ended on Monday at $28.29. The shares are up 5.69 percent in pre market.
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