US food giant ConAgra has cut costs and increased prices, helping it to a better than expected rise in its third quarter earnings, the company reported on Thursday.
ConAgra cited a focus on its consumer foods segment as one reason for the six percent rise, having overhauled brands like its Healthy Choice and Banquet lines, while attempting to find a balance between product price and commodity costs.
ConAgra Foods’ chief executive officer Gary Rodkin said: “I am pleased that Consumer Foods profits grew over prior-year amounts and that we are positioned for even more improvement from that segment in the fiscal fourth quarter. Given our recent new product introductions, moderating inflation and strong cost savings, the foundation for this segment is much stronger than in recent years.”
However, some of the reported increase in earnings was due to higher pricing, as consumer sales volumes fell four percent.
The company’s Peter Pan brand peanut butter was hit by the salmonella scandal linked to peanut products, despite the company’s assurances to the public that it did not source any of its peanut ingredients from the Peanut Corporation of America at the heart of the outbreak.
Profits fell to $193.2m for the quarter ended February 22, from $309.1m a year earlier, but underlying earnings were up to $3.135bn from $2.955bn reported last year.
Rodkin added: “We expected the slight decline in Commercial Foods profits given the exceptionally high profits generated in the year-ago period by capitalizing on opportunities in the turbulent wheat markets.”
The company said that it expects higher profits in the fourth quarter, largely due to expectations that inflation will moderate, as well as cost savings and bringing new products to market.
Excluding discontinued operations, earnings per share were up eighteen percent to $0.40 from prior year levels of $0.34. This was a better than anticipated result: Nine analysts polled by Reuters had forecast earnings of $0.36 per share.
ConAgra also reaffirmed its expectations for fiscal 2009.