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ConAgra Foods' Q4 Sales Miss, Plans To Separate

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ConAgra Foods, Inc. (NYSE: CAG) announced 42.8 percent drop in net income for the fourth quarter hurt by increased operational costs as sales dipped 9.5 percent. Its sales missed the Street predictions while adjusted earnings came in line with the expectations. The company indicated its plan to separate the company into two.

ConAgra Foods reported net income of $120.9 million for the fourth quarter, down from $211.5 million in the prior year quarter. Similarly, its earnings dropped to $0.27 a share from $0.48 a share in the year-ago quarter. Its adjusted earnings from continuing operations were $0.52 a share, which was in line with the Street estimations.

The company's net sales fell 9.5 percent to $2.83 billion from $3.12 billion in the previous year quarter. This fell short of the Street expectations of $2.89 billion.

ConAgra Foods' CEO, Sean Connolly, commented, "Fiscal 2016 was a year of tremendous accomplishment and progress, as we reshaped the portfolio, strengthened the balance sheet, and transformed our culture. Specifically, we divested the Private Brands operations, repaid approximately $2.5 billion of debt, announced plans to spin-off Lamb Weston and sell other parts of the Commercial Foods segment, and prepared to move our headquarters to Chicago as part of becoming more lean and agile."

He added, "Amidst all of this change, both of our operating segments posted very good results, largely reflecting increased focus on expanding margins through continued supply chain productivity, better price/mix, and lower SG&A. In the near term, we will remain focused on these areas while pursuing targeted and impactful marketing and innovation to deliver consistent margin and profit improvement. Each segment is in an excellent position as we prepare to operate Conagra Brands and Lamb Weston as more focused pure plays later this year, and I want to congratulate our team on their successes getting us to this point."

Moving ahead, the company indicated its plans to separate into two independent pure play companies, Conagra Brands and Lamb Weston. The company added that the transaction is expected to be structured as a spin-off of the Lamb Weston business, tax free to the company, as well as, its shareholders, in the fall season of 2016.

Its statement said it would report its fiscal 2017 first quarter results in the ordinary course, i.e. as a consolidated enterprise. ConAgra expects first quarter to demonstrate double-digit comparable year-over-year EPS growth due to a continuation of the productivity, price/mix, and cost discipline initiatives underway, as well as lower interest expense.

Posted-In: Earnings News Guidance


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