ConAgra hails ‘important turning point’ as organic volumes in consumer foods rise for first time in two years

27-Jun-2013 - Last updated on 28-Jun-2013 at 00:45 GMT

ConAgra Foods CEO Gary Rodkin: 'Our vision is to transition the private brands business model from transactional to strategic partnerships'

Related tags Gary rodkin Private label Conagra foods

Organic volumes in ConAgra Foods’ Consumer Foods segment rose 3% in the last quarter, marking an “important turning point” after more than two years of negative growth, said CEO Gary Rodkin yesterday.

Speaking on the firm’s Q4 earnings call, he said that sales in the Consumer Foods segment - which includes brands such as Marie Callender's, Healthy Choice, Hunt's, PAM cooking spray and Reddi-wip toppings - were up 7% to $2.3bn.

Excluding acquisitions, organic volumes rose 3%,”an important turning point and a strong improvement from what we saw earlier this fiscal year”, he added.

The improvement was also welcomed by analysts on the call, with Citigroup’s David Driscoll noting that “after I think, 10 quarters of negative volumes in Consumer Foods, it feels great to see a plus 3% on that figure. So congratulations on that. Nice job in establishing some momentum there.”

Chief financial officer John Gehring added: “In this quarter, base volumes increased about 3%, which represents a significant sequential improvement over the third quarter.”

Our vision is to transition the private brands business model from transactional to strategic partnerships

Meanwhile, synergies from integrating recent acquisition Ralcorp - which has made Omaha-based ConAgra Foods the largest private brand packaged food manufacturer in the US - are likely to be significantly higher than originally estimated, said Rodkin.

"As part of the integration process, we have identified additional synergies and increased our fiscal 2017 synergy goal by a significant amount [from $225m to $300m by fiscal 2017, with additional savings coming from procurement, logistics, plant efficiencies and SG&A savings]."

Meanwhile, recent meetings with ConAgra’s biggest customers to talk about private label strategies following the Ralcorp deal had gone well, he claimed.

Con-Agra-HQ-landscape — Private label powerhouse: According to ConAgra Foods, 74% of consumers are now more open to buying more private brands than they were two years ago

“Our vision is to transition the private brands business model from transactional to strategic partnerships. And in our recent top-to-top meetings with almost all our major customers, I can personally attest they have a very strong appreciation for the functional expertise, scale and growth opportunities that we bring to the table with our portfolio.”

In the first half of fiscal 2014, ConAgra Foods will move to three financial reporting segments: