Packaged food company ConAgra Foods, Inc., (CAG) reported Wednesday a sharp decline in third-quarter profit, hurt mainly by higher Ralcorp acquisition related charges and the absence of prior year's investment gain. Adjusted earnings increased from last year on higher net sales, but missed analysts' estimates.
The company, however, reaffirmed its fiscal 2013 earnings forecast, which is in line with estimates and declared a dividend. In pre-market activity, ConAgra shares are down $0.70 or 1.97 percent, and currently trading at $34.84.
In its recently concluded third quarter, net income attributable to the company decreased 57.2 percent to $120 million from $280.1 million last year. Profit per share was $0.29, down 56.7 percent from $0.67 earned a year-ago.
The latest quarter results included $0.26 per share of items, mainly related to about $0.16 per share of net expense resulting from acquisition, and related restructuring, and integration costs. The prior year's results included $0.14 per share of net benefit related to a gain on the company's increased investment in Agro Tech Foods, Ltd.
Excluding items, earnings per share increased 4 percent to $0.55 from $0.53 a year ago. On average, 13 analysts polled by Thomson Reuters expected the company to report profit per share of $0.56 for the quarter. Analysts' estimates typically exclude special items.
The company noted that an approximate 33 percent increase in base business marketing investment in consumer foods segment reduced the quarter's earnings per share by approximately $0.04 per share.
Quarterly net sales improved 13.4 percent to $3.85 billion from $3.40 billion last year. Analysts expected sales of $3.87 billion for the quarter.
Consumer Foods segment's net sales grew 6.8 percent mainly reflecting 7 percent contribution from acquisitions. Net sales of commercial foods segment edged up 1.3 percent.
ConAgra completed the acquisition of Ralcorp on January 29, 2013. Net sales from Ralcorp Frozen Bakery Products were $79.3 million and from Ralcorp Food Group were $212.5 million.
Further, the company said its board of directors approved a dividend of $0.25 per share to be paid on May 31, to stockholders of record at the close of business on April 30.
Looking ahead, ConAgra continues to expect fiscal 2013 adjusted earnings to be approximately $2.15 per share, resulting in 17 percent year-over-year growth. The forecast includes approximately $0.05 per share benefit from the acquisition of Ralcorp. Analysts expect the company to report fiscal 2013 profit per share of $2.15.
Rodkin said, "Our organization is very focused on the ongoing integration of Ralcorp, which will play a key role in creating shareholder value. We reaffirm our expected comparable EPS benefit of $0.05 in fiscal 2013 results and $0.25 in fiscal 2014 results, and are very excited about our earnings potential over the next few years."
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