Conagra Foods F2011 Q1 results

ConAgra Foods, Inc., recently reported results for the fiscal 2011 first quarter ended Aug. 29, 2010:

Diluted EPS from continuing operations was $0.32, including $0.02 per diluted share of net expense from items impacting comparability.  Adjusting for those items, diluted EPS from continuing operations was $0.34, which is below comparable year-ago amounts.  For the same period a year ago, diluted EPS from continuing operations as reported was $0.37, which included $0.01 of expense from items impacting comparability.  Items impacting comparability in the current year and prior year are summarized toward the end of this release.
 
Gary Rodkin, ConAgra Foods’ chief executive officer, said, ?Our fiscal first-quarter margins and EPS were lower than planned because of an intense promotional environment and inflation that outpaced cost savings.  There were, however, several signs of strength in terms of market share and brand sales, demonstrating progress and growth potential for important parts of our portfolio.

He continued, ?Our plans are to improve the EPS performance in the back half of the year through increased contribution from recently introduced new products and recent acquisitions, productivity initiatives, and more effective promotional strategies.  Our initiatives, as well as lower SG&A expense, are expected to provide meaningful financial offset to the challenges we face. 
Furthermore, the positive impacts from a higher-quality potato crop are expected to provide increased year-over-year profitability for the Commercial Foods segment, particularly in the back half of the year.  

?Based on the first-quarter performance and overall business conditions, we have revised our yearly outlook to 5-7% comparable EPS growth for the full year.  We are confident that the strong foundation we have built over the last few years through innovation, cost savings, marketing, and sales execution initiatives will allow us to deliver our revised full-year EPS results.

PotatoPro picked out some specifics on performance of savory snacks and potato products in this financial report and associated Q &A :

Consumer Foods Segment (65% of first-quarter sales)
Branded and non-branded food sold in retail and foodservice channels.

 
Lapping a strong quarter in the year-ago period, the Consumer Foods segment posted sales of $1,824 million and operating profit of $214 million for the first quarter.  Sales decreased 2% as reported, reflecting a 3% organic volume decline, a 1% decline in overall price/mix, and a 2% benefit from acquisitions (net of divestitures).  
 
Due to an intensely competitive environment, sales results reflect higher-than-planned promotional spending for some categories, particularly frozen foods, table spreads, and popcorn.  In general, promotional programs did not drive increased consumer purchase to the extent expected, reflecting the prolonged economic challenges consumers have faced and the difficult retail environment.

Popcorn brands ACT II and Orville Redenbacher's were among the brands that posted a sales decline (Q&A)

Commercial Foods Segment (35% of first-quarter sales)
Specialty potato, seasonings, blends, flavors, and milled grain products sold to foodservice and commercial channels worldwide.

 
Sales for the Commercial Foods segment were $993 million, 3% below last year’s $1,026 million. Segment operating profit was $112 million, 17% below last year’s $134 million.

Lamb Weston specialty potato operations posted increased sales and unit volume despite continued weak restaurant industry conditions;but as expected, the impact of last year’s poor-quality potato crop resulted in a decline in operating profit for those operations.

The company begins processing a new potato crop during the second fiscal quarter of fiscal 2011, which is expected to significantly improve results in the back half of the fiscal year.