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ConAgra Foods Quarterly Sales Fall 2 Percent

Thursday, 18 December 2014 08:37 AM

ConAgra Foods Inc. reported quarterly sales that missed estimates due to weak demand for branded foods and said recovery in its under-performing private-label business would take longer than expected.

Shares of the company, whose brands include Chef Boyardee and Healthy Choice, fell 1.2 percent to $36.66 in premarket trading on Wednesday.

Sales in the branded foods business, ConAgra's largest, fell 2 percent in the second quarter ended Nov. 23, due to weak demand for products such as Hunt's ketchup and Bertolli frozen meals.

The business has not shown sales growth for the last six quarters, in part due to a general shift in consumer tastes towards food perceived as healthier.

In its private label business, which makes cereals, pasta, snacks and sauces that retailers sell as their own, the company has been facing intense competition to win contracts.

ConAgra became the biggest U.S private-label food company with its purchase of Ralcorp in 2012. But it has struggled to reach profit targets, due to cut-price deals Ralcorp had entered into with customers before it was taken over.

ConAgra said in June it expected a modest recovery in profit and revenue in the private-label business in fiscal 2015 as price concessions come to an end.

"Given recent performance and the current outlook, the company expects year-over-year profit improvement for this segment (private brands) to occur in fiscal 2016 instead of fiscal 2015," the company said in a statement on Thursday.

Net income attributable to the company fell to $10 million, or 2 cents per share in the second quarter, from $248.7 million, or 58 cents per share, a year earlier.

The company took a $247 million charge in its private brands business related to impairment of goodwill and other intangible assets.

Excluding items, the company reported earnings of 61 cents per share, in line with analysts' estimates.

Net sales for the company fell 1.7 percent to $4.15 billion. Analysts on average had expected revenue of $4.20 billion, according to Thomson Reuters I/B/E/S.

Up to Wednesday's close of $37.10, the company's shares had risen 10 percent this year.

© 2018 Thomson/Reuters. All rights reserved.

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ConAgra Foods Inc. reported a 2 percent fall in quarterly net sales, due to weak demand for branded foods such as Hunt's ketchup and Bertolli pastas and frozen meals.
conagra, food, earnings, profit
Thursday, 18 December 2014 08:37 AM
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