ConAgra 1Q Net Falls 42% On Higher Costs; Raises Inflation Estimate |
| Wall Street Journal - Sep 20, 2011 |
ConAgra Foods Inc.'s (CAG) fiscal first-quarter earnings fell 42% as the packaged food company's increased sales couldn't fully offset a 15% jump in the cost of goods.
ConAgra, which Monday lost out on its pursuit of the food-maker Ralcorp Holdings Inc. (RAH), also warned that adjusted second-quarter earnings would also fall from what they were a year earlier, due to both rising ingredient cost and a planned increase in marketing spending to hopefully boost sales. Analysts were expected earnings for the current quarter to be flat.
ConAgra shares fell 4.8% in premarket trading to $22.26 on the second-quarter profit warning. The company did back its earnings outlook for the year, though inflation is now expected to rise of 9% to 10% for the consumer foods segment, up from its original estimate of 7% to 8%. The company plans further price increases in the current quarter to try to offset the rising costs.
Like many consumer-product companies, ConAgra's margins have been squeezed by increased costs for raw materials. The maker of Healthy Choice meals, Slim Jim meat snacks and Reddi-wip raised prices on 90% to 95% of its portfolio during the fourth quarter and hoped to lower operating costs enough to mitigate rising input costs.
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- Posted: 2011-09-20 11:16:42
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