Tags: food | ConAgra | profit | brands

ConAgra Sees Modest Recovery in Private Brands Unit

Thursday, 26 Jun 2014 10:07 AM

ConAgra Foods Inc., the maker of Hunt's tomato ketchup and Slim Jim beef jerky, reported higher-than-expected revenue and forecast a modest recovery in its struggling private-brands business, sending its shares up almost 2 percent in premarket trading.

Just last week the company cut its fourth-quarter profit forecast because of weak sales for both its consumer brands and for the private-branded cereals, pasta, snacks and sauces it makes for retailers to sell under their own labels.

ConAgra said higher sales at its commercial foods business, which makes ingredients for restaurants and other manufacturers, made up for weakness in the consumer foods and private brands businesses in the quarter.

ConAgra forecast profit per share to grow in the mid-single digits in the year to May 2015, with sales and profit at its private label business growing "modestly," helped by strong synergies and gradually improving price mix.

The company boosted its private brands business by buying Ralcorp Holdings for $5 billion in January last year, hoping to do well as shoppers recovering from a recession bought cheaper store-branded products.

But the business has struggled to reach operating profit targets, which analysts blame on cut-price deals Ralcorp entered into with customers before it was sold.

"Some pricing decisions were made prior to the acquisition that was not necessarily in the best interest of ConAgra after they would acquire the company," Rhino Trading Partners LLC analyst Timothy Chen told Reuters on Monday.

Weakness in the acquired business, combined with lower sales of frozen meals and desserts as people opt for healthier food, forced ConAgra to cut its full-year profit forecast twice last year.

The company reported a net loss of $324.2 million, or 77 cents per share, compared with a profit of $192.2 million, or 46 cents per share, a year earlier.

Excluding items such as restructuring costs, the company earned 55 cents per share, in line with its lowered estimate.

Revenue fell almost 3 percent to $4.44 billion. Analysts on average had expected revenue of $4.4 billion, according to Thomson Reuters I/B/E/S.

Shares were trading at $29.20 in premarket trading on Thursday.

© 2017 Thomson/Reuters. All rights reserved.

 
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ConAgra Foods Inc., the maker of Hunt's tomato ketchup and Slim Jim beef jerky, reported higher-than-expected revenue and forecast a modest recovery in its struggling private-brands business, sending its shares up almost 2 percent in premarket trading.
food, ConAgra, profit, brands
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2014-07-26
Thursday, 26 Jun 2014 10:07 AM
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