Consumer foods giant ConAgra Foods (NYSE:
) reported weaker than expected earnings on Wednesday mainly due
to restructuring charges related to the closing of its
acquisition of Ralcorp. Shares in the company fell 2.03 percent
For the fiscal third quarter of 2013, ConAgra reported
adjusted EPS of $0.55, lower than estimates of $0.57 for the
quarter. Revenue was also slightly weak at $3.85 billion compared
to estimates of $3.87 billion. Compared to the same period a year
ago, adjusted EPS fell 57.2 percent from $0.68 reported a year
The company noted that the key Consumer Foods division saw
operating profit increase from the same period last year but
reduced EPS due to increased investments in marketing and other
overhead costs. The company reported that sales in the segment
grew 7 percent from the same period a year ago, driven by
Also, the company completed the acquisition of Ralcorp in the
quarter and the results reflect 27 days of EPS benefit from
Ralcorp. ConAgra expects Ralcorp to contribute approximately
$0.05 per diluted share of EPS in in fiscal 2013.
In addition, the board of directors declared a dividend of
$0.25 per share to be paid to shareholders as of April 30. The
dividend is the same amount that was paid in the previous two
quarters, which was a raise of $0.01 per share from the quarter
prior to that.
ConAgra reaffirmed its fiscal 2013 guidance in the report,
stating that it expects to earn $2.15 per share in fiscal 2013.
The expected EPS would represent a 17 percent comparable increase
from the prior year and would include the $0.05 per share benefit
from the Ralcorp acquisition.
Gary Rodkin, ConAgra Foods' chief executive officer, said, "We
are pleased with the earlier-than-planned closing of the Ralcorp
transaction, sequential improvement in our Consumer Foods
volumes, comparable profit growth in both of our core business
segments, and the announcement of Ardent Mills, a new proposed
joint venture for our milling operations. Challenges remain for
key areas of our business, but a combination of successful margin
improvement initiatives and a more favorable input cost
environment is enabling us to significantly increase our brand
investment and deliver EPS growth."
He continued, "Our organization is very focused on the ongoing
integration of Ralcorp, which will play a key role in creating
shareholder value. We reaffirm our expected comparable EPS
benefit of $0.05 in fiscal 2013 results and $0.25 in fiscal 2014
results, and are very excited about our earnings potential over
the next few years. This is a great time to be a part of ConAgra
The company also made note of the impact of the Ralcorp
acquisition to results. "Approximately $0.16 per diluted share of
net expense, or $103 million pretax, resulted from the
acquisition, acquisition-related restructuring, and integration
costs [related to Ralcorp]. $81 million is within unallocated
Corporate expense, $17 million is within the Ralcorp results, and
$5 million is within Consumer Foods."
The company will host a conference call at 9:30 am eastern
Wednesday, April 3 to discuss results with the investment
community. Information can be found on the company's investor
ConAgra shares declined 2.03 percent in the pre-market
following the weaker than expected earnings release. Following
the earnings release, analysts at Deutsche Bank reiterated a hold
rating on the stock with a price target of $40.00, representing
about 12.55 percent upside from the current price over the next
(c) 2013 Benzinga.com. Benzinga does not provide investment
advice. All rights reserved.
Profit with More New & Research
. Gain access to a streaming platform with all the information
you need to invest better today.
Click here to start your 14 Day Trial of Benzinga