Milling & Baking News Corporate Profiles - November 2013 - (Page 86)

Company Overview ConAgra Foods, Inc. Ralcorp integration and intense competition put pressure on the company T he first quarter of fiscal year 2014 got off to a rocky start for ConAgra Foods, Inc., and followed a year in which the company gained significant momentum through a series of acquisitions that included Ralcorp Holdings, Odom's Tennessee Pride Sausage and some frozen food assets from Unilever. Issues that impacted the first quarter related to integrating the Ralcorp business and increased frozen food category competition. For the first quarter ended Aug. 25, 2013, net income attributable to ConAgra Foods was $144,300,000, equal to 34c per share on the common stock, compared with $250,100,000, or 61c, during the same period of the prior year. Net sales for the quarter were $4,201,800,000, compared with $3,302,300,000 during the first quarter a year ago. The poor performance followed fiscal 2013, ended May 26, 2013, in which the company saw its earnings climb 65% to $773.9 million, equal to $1.85 per share on the common stock. Sales for the year increased 16% to $15,491.4 million. The situation ConAgra Foods faces as it heads deeper into fiscal 2014 is challenging. So challenging, in fact, the company lowered its fiscal 2014 earnings-per-share projection downward to a range of $2.34 to $2.38. The company's prior target was approximately $2.40. Poor volume performance in the Consumer Foods business unit led to a 42% drop in income during the first quarter of fiscal 2014, as competitors in such categories as frozen foods and canned pastas pulled away share from ConAgra with improved merchandising efforts. To stabilize the segment, ConAgra is shifting dollars from advertising to merchandising, which historically has helped the company lift volumes. "Price value is more important than ever before, and we need to get back our share of quality merchandising and our market share," said Gary Rodkin, chief executive officer, on Sept. 19. "This environment is requiring us to be more cost conscious across the whole company so that we can deliver that value. This includes raising the bar and being more selective on where we spend our resources, including our marketing dollars." As for the cooled-off frozen meal market, which is one of ConAgra's largest categories, a consumer migration to Chief executive officer - Top brands - 2013 fiscal year global sales - Gary Rodkin 86 \ November 2013 fresh alternatives on the grocery store's perimeter may be to blame, the company said. For its Commercial Foods segment, ConAgra predicted a decrease in operating profit during fiscal 2014, driven by the negative effect of losing a major food service customer from its Lamb Weston potatoes business as well as the impact from its Ardent Mills transaction with Cargill and CHS, Inc. In January 2013, ConAgra completed its acquisition of Ralcorp and quickly became the largest manufacturer of private label products in North America. The company lowered expectations for its Ralcorp business during the year as it continued working to integrate and restructure the newly acquired division, but the company sees eventual payoff in its private brand strategy. ConAgra Foods also sold its Lightlife Foods business to private equity investor Brynwood Partners VI L.P. Terms of the transaction were not announced. Lightlife Foods is a manufacturer of meatless frozen and refrigerated foods. As part of the agreement, Brynwood Partners also acquired the Lightlife manufacturing plant in Turners Falls, Mass. CP $15.5 billion Banquet Healthy Choice Hunt's Marie Callender's Orville Redenbacher's Slim Jim Wesson Milling & Baking News * Food Business News * Baking & Snack * Meat & Poultry Corporate Profiles

Table of Contents for the Digital Edition of Milling & Baking News Corporate Profiles - November 2013

Milling & Baking News Corporate Profiles - November 2013