Gary Rodkin, ConAgra Foods’ chief executive officer, said, “I am pleased that Consumer Foods profits grew over prior-year amounts and that we are positioned for even more improvement from that segment in the fiscal fourth quarter. Given our recent new product introductions, moderating inflation and strong cost savings, the foundation for this segment is much stronger than in recent years.”
He continued, “We expected the slight decline in Commercial Foods profits given the exceptionally high profits generated in the year-ago period by capitalizing on opportunities in the turbulent wheat markets. We are confident in the strength of our underlying Commercial Foods operations and the ability of our management to navigate the current challenging economic conditions. We expect both of our operating segments to perform well in the fourth quarter and for supply chain savings and SG&A efficiencies to continue to be strong, resulting in fiscal 2009 EPS of slightly above $1.50, excluding items impacting comparability.”
Specific potato/snack related remarks in Conagra Foods' 3Q report:
Consumer Foods’ comparable sales growth was 5%, reflecting 10% contribution from pricing and mix, partially offset by a 4% decline in unit volume and a 1% negative impact from foreign exchange. A significant portion of the volume decline was attributable to two brands, ACT II popcorn and Peter Pan peanut butter, as well as mix improvement efforts in the foodservice operations. The drop in ACT II volume reflected the intentional elimination of some very low-margin business in favor of more focus behind higher-margin Orville Redenbacher’s popcorn.
As part of Conagra's transformation of its frozen food business, Alexia Foods recently introduced Alexia Natural Crunchy Snacks: Ready-to-eat Waffle Fries and Onion Strips made from natural vegetables, herbs, and spices. This line, which was introduced shortly after quarter-end, contains no artificial flavors and no trans fat.
For the fiscal third quarter, sales for the Commercial Foods segment were $1,121 million, 8% ahead of year-ago amounts, primarily reflecting higher sales at Lamb Weston and, to a lesser extent, at ConAgra Mills. Segment operating profit was $140 million for the quarter, 3% below year-ago amounts.
One of the factors mentioned as influencing the operating profit performance of its Commercial Foods segment, is a more modest growth rate of Lamb Weston. For the Fourth quarter a "continued solid top line performance"of Lamb Weston is expected.
