By Lisa Beilfuss
ConAgra Foods Inc. swung to a profit in its latest quarter, topping
expectations and suggesting the company’s efforts to remake itself are paying off.
Shares rose 1% to $45.89 in morning trading in New York.
The Omaha-based food maker, known for brands including Slim Jim snacks, Banquet frozen meals and Peter Pan peanut butter, has been reshaping its business as its grapples with consumers’ increasing preference toward foods that are perceived as more natural and healthful and away from packaged options.
In February, ConAgra completed its $2.7 billion sale of its private label business to TreeHouse Foods. ConAgra bought the business, which makes cereal, pasta, condiments for supermarkets to use as their house brands, about three years earlier for $5 billion and faced pressure from activist investor Jana Partners to shed it.
Chief Executive Sean Connolly said Thursday that with the sale of the private-label business closed, the company is focused on executing cost cuts and further segmentation of its portfolio.
ConAgra previously announced plans to cut $300 million in annual costs that included 1,500 layoffs, and it is in the process of spinning of its Lamb Weston frozen-potato line. The split will rid ConAgra of most of its existing business selling foods to restaurants and other commercial customers, and it will separate ConAgra into two independent companies. Mr. Connolly said the move is on track to be completed in the fall.
In its latest quarter, sales in the commercial business rose 6% from a year earlier to $1.1 billion, driven by “notably strong” Lamb Weston sales. That increase offset a 2% revenue decline in the branded foods segment, where volume fell 4% and currencies took 1% off sales.
Overall, ConAgra reported a profit of $204.6 million, or 46 cents a
share, up from a year-earlier loss of $954.1 million, or $2.23 a share.
Excluding restructuring charges, among other items, earnings were 68 cents a share, up from 59 cents.
Revenue edged 0.6% higher to $2.92 billion. Analysts projected 58 cents in adjusted earnings per share and $2.86 billion in sales, according to Thomson Reuters.
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