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ConAgra Foods Inc. Reports Operating Results (10-Q)

December 28, 2012 | About:
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10qk

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ConAgra Foods Inc. (CAG) filed Quarterly Report for the period ended 2012-11-25.

Conagra Foods, Inc. has a market cap of $12.01 billion; its shares were traded at around $29.43 with a P/E ratio of 15.4 and P/S ratio of 0.9. The dividend yield of Conagra Foods, Inc. stocks is 3.4%. Conagra Foods, Inc. had an annual average earning growth of 3.7% over the past 5 years.

Highlight of Business Operations:

Consumer Foods net sales for the second quarter of fiscal 2013 were $2.42 billion, an increase of $244.9 million, or 11%, compared to the second quarter of fiscal 2012. Consumer Foods net sales for the first half of fiscal 2013 were $4.47 billion, an increase of $395.8 million, or 10%, compared to the first half of fiscal 2012. Results for the second quarter reflected an 11% benefit from acquisitions and a 4% increase from net pricing/mix, offset by a 4% decrease in volume performance from our base businesses (those businesses owned for more than one year). Results for the first half of fiscal 2013 reflected a 10% benefit from acquisitions and a 4% increase from net pricing/mix, offset by a 4% decrease in volume performance from our base businesses (those businesses owned for more than one year). Decrease in volume performance from our base businesses is primarily attributable to volume elasticity or the dampening effect of pricing in the marketplace for both the second quarter and first half of fiscal 2013.

Consumer Foods operating profit for the second quarter of fiscal 2013 was $286.0 million, an increase of $29.7 million, or 12%, compared to the second quarter of fiscal 2012. Gross profits in Consumer Foods were $85.0 million higher for the second quarter of fiscal 2013 than for the second quarter of fiscal 2012, driven by the impact of higher net sales, discussed above, and the benefit of supply chain cost savings initiatives, partially offset by moderate inflation in product costs (particularly for proteins, vegetables, sweeteners, peanuts, and beans). Advertising and promotion expenses increased by $31.2 million in the second quarter of fiscal 2013 compared to the second quarter of fiscal 2012. The Consumer Foods segment also incurred costs of $1.4 million and $15.3 million in connection with the restructuring plans in the second quarter of fiscal 2013 and 2012, respectively, as well as $5.1 million of acquisition-related expenses, including certain exit costs, in the second quarter of fiscal 2013.

Consumer Foods operating profit for the first half of fiscal 2013 was $521.3 million, an increase of $68.8 million, or 15%, compared to the first half of fiscal 2012. Gross profits were $147.6 million higher in the first half of fiscal 2013 than in the first half of fiscal 2012, driven by the impact of higher net sales, discussed above, and the benefit of supply chain cost savings initiatives, partially offset by moderate inflation in product costs (particularly for proteins, packaging, sweeteners, peanuts, and beans). Other items that significantly impacted Consumer Foods operating profit in the first half of fiscal 2013 included an increase in advertising and promotion expenses of $49.5 million and charges totaling $8.4 million of acquisition-related expenses, including certain exit costs, in the first half of fiscal 2013, as well as $5.0 million related to the execution of our restructuring plans. Consumer Foods operating profit in the first half of fiscal 2012 included $31.3 million of charges related to our restructuring plans.

For the first half of fiscal 2013, operating profit for the Commercial Foods segment was $308.9 million, an increase of $50.6 million, or 20%. Gross profits in the Commercial Foods segment were $61.8 million higher in the first half of fiscal 2013 than in the first half of fiscal 2012, driven by higher gross profit in the Lamb Weston® specialty potato operations due to increased volume and net pricing, offsets by decreased productivity impacted by raw quality of potatoes affecting plant recovery and throughputs. Commercial Foods operating profit included $1.3 million and $5.5 million of charges in the second quarter and first half of fiscal 2012, respectively, related to the execution of our restructuring plans.

In the second quarters of fiscal 2013 and 2012, our income tax expense was $109.1 million and $92.9 million, respectively. The effective tax rate (calculated as the ratio of income tax expense to pre-tax income from continuing operations, inclusive of equity method investment earnings) was approximately 34% for the second quarters of fiscal 2013 and 2012, respectively. In the first half of fiscal 2013 and 2012, our income tax expense was $232.6 million and $141.6 million, respectively. The effective tax rate was approximately 33% and 34% for the first half of fiscal 2013 and 2012, respectively. The lower effective tax rate for the first half of fiscal 2013 reflected the benefits of a lower state tax effective rate, a larger international rate benefit due to acquisitions, and favorable state audit settlements in fiscal 2013 that related to prior periods.

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