* Second-quarter revenue $3.74 bln vs est $3.69 bln
* Adj earnings from continuing ops $0.57/shr vs est
* Sees full year EPS at least $2.06/share vs est $2.07/share
* Expects full year net sales to grow 7-8 pct
* Shares touch 13-year high
By Siddharth Cavale
Dec 20 ConAgra Foods Inc raised its
full-year earnings forecast on expectations that recent
acquisitions and increased marketing will boost sales, sending
shares of the maker of Chef Boyardee pastas and Hunt's ketchup
to a 13-year high.
ConAgra's shares rose as much as 3 percent to $30.80, before
easing back to $30.29, on the New York Stock Exchange on
ConAgra now expects per-share earnings of at least $2.06 for
the year ending May 13, compared to its earlier forecast of
$2.03 to $2.06 and analysts' average estimate of $2.07.
The company last month announced the $5 billion acquisition
of Ralcorp Holdings Inc that will make it the top U.S.
producer of private-label foods that stores brand as their own.
ConAgra, which sells brands such as Act II, Hebrew National,
Marie Callender's and Orville Redenbacher's in its consumer
foods business, said its full-year earnings forecast does not
include any benefit from its largest acquisition this year, the
An updated forecast will be issued after the deal closes in
the first quarter of 2013, it added.
"The Ralcorp transaction will clearly be a game changer in
terms of our private label footprint," Chief Executive Gary
Rodkin said on a post-earnings conference call with analysts.
ConAgra has been beefing up its presence in the
private-label foods business, which often grows faster than the
branded food market when lingering unemployment squeezes
It also bought breakfast sandwich and sausage maker Odom's
Tennessee Pride and Kangaroo Brands' pita chip business this
year. It also struck a deal to buy Unilever Plc's
North American frozen meal business for $265 million.
These deals have broadened ConAgra's exposure to
faster-growing retailers with robust private-label brands, like
Whole Foods Market Inc and Costco Wholesale Corp
"(We are) making a business model for private label that we
expect will consistently post strong top line and bottom line
growth over time," Rodkin said on the call.
The company said it expects net sales to grow 7 to 8 percent
in fiscal 2013, implying revenue between $14.19 billion and
$14.32 billion, according to Reuters calculations. Analysts were
looking for $14.43 billion, according to Thomson Reuters
The company has stepped up marketing initiatives in a bid to
strengthen its brand and expects this to improve sales volumes
in the consumer foods business this year.
"Sales growth for the consumer segment is expected to be in
the high single digits in fiscal 2013," John Gehring, chief
financial officer, said on the call.
ConAgra's net profit rose to $211.6 million, or 51 cents per
share, in the quarter ended Nov. 25, from $180.2 million, or 43
cents per share, a year earlier.
Excluding items, the company earned 57 cents per share from
continuing operations, topping Wall Street expectations by 2
"The results reflect the number of deals they have done over
the past year," Morningstar analyst Erin Lash told Reuters.
Sales rose 9 percent to $3.74 billion. Sales in its consumer
foods business rose 11 percent to contribute 64 percent to total
revenue. Analysts on average had expected sales of $3.69
Sales in the commercial foods business rose 5 percent,
helped by strong sales at is Lamb Weston potato business outside
the United States. The company expects full-year growth in the
segment to be about 3 percent.