ConAgra profit meets Street view; shares fall

By Martinne Geller

NEW YORK (Reuters) - ConAgra Foods Inc (CAG.N) reported quarterly profit in line with analysts' expectations, dashing hopes the foodmaker would top estimates as some competitors had and sending its shares down more than 6 percent.

The company also forecast profit for the just-begun fiscal year that was also largely in line with expectations.

ConAgra shares had jumped 7.5 percent in the weeks leading up to Thursday's report, as investors hoped the maker of Healthy Choice frozen meals and Peter Pan peanut butter would exceed expectations as other food makers, including Kraft Foods Inc (KFT.N) and Hormel Foods Corp (HRL.N) have recently done.

Edward Jones analyst Jack Russo said some expectations might have "gotten out of hand" and said ConAgra's results showed that sales trends are improving and that its cost-cutting efforts are paying off.

"Obviously (there is) some concern over the economic recovery in this country, but all in all, (there were) no surprises and that could be a good thing sometimes," Russo said.

ConAgra has overhauled some product lines with new offerings under its Healthy Choice, Marie Callender's and Banquet brands, as it seeks to turn its consumer foods business around.

Chief Executive Gary Rodkin said ConAgra is poised to increase earnings in fiscal 2010, along with investment in its brands, due in part to moderating inflation.

The company also said that an explosion that killed three workers earlier this month at its North Carolina Slim Jim processing plant should have no material impact on the brand.

The company said it was using existing inventory to supply customers, though it might face some shortages in the first quarter. It said it expected to resume producing Slim Jims in the next few weeks both on its own and through a third party.

Net income was $174.7 million, or 39 cents per share, in its fiscal fourth quarter, ended on May 31, down from $201.3 million, or 41 cents per share, a year earlier.

Excluding items, profit was 41 cents per share, matching analysts' average forecast, according to Reuters Estimates.

Sales rose 7.5 percent to $3.30 billion.

The company expects to earn $1.63 to $1.66 per share in fiscal 2010. Analysts on average were expecting $1.63, according to Reuters Estimates.

The company said its profits are getting a boost as its cost-cutting efforts are outweighing cost inflation, which ConAgra expects to be in the low single-digits.

ConAgra shares were down $1.30, or 6.5 percent, at $18.73 in morning trade.

(Reporting by Martinne Geller; editing by John Wallace, Dave Zimmerman)