ConAgra optimistic on 2007 despite Peter Pan fiasco

By Philippa Jones

- Last updated on GMT

Related tags: Peanut butter, Food

ConAgra Foods has announced that it expects its earnings per share
for fiscal 2007 to be higher than previously projected thanks to a
strong performance by its trading and merchandising arm.

The company said it now expects fiscal 2007 earnings per share to be above the high end of the $1.28-$1.33 range it had previously announced. This upward revision is due primarily to significantly stronger than expected fourth quarter results from its trading and merchandising sector, through which it manages a portfolio of agricultural and energy commodities, said the food manufacturing giant. The optimistic forecast includes the adverse impact on profits from the peanut butter recall earlier this year. The company had to recall batches of Peter Pan and Great Value branded peanut butter after they were connected to outbreaks of salmonella across the US. The Peter Pan and Great Value branded products were linked to sickness that affected at least 425 people across 44 US states. ConAgra said it would provide precise details of its performance, including current estimates of the cost of the peanut butter recall, in its fourth-quarter earnings release and conference call scheduled for Wednesday June 27. This will also be the moment to see whether the company's rationalisation measures are staring to bear fruit. ConAgra has been undergoing a restructuring program, which it says is designed to help it streamline operations, reduce operating costs, improve capacity utilization and boost gross margins. It said last year that it hopes by financial year 2009 that total plant rationalization efforts will result in a $100 million reduction in annual fixed costs. The company announced in September last year that it planned to close five plants and reduce its workforce by 400 over the next 12 to 18 months. This news came after the company had already announced closures of several plants in March. These moves are as the mark of an ongoing reshuffling in the food processing sector as companies attempt to adjust to pressure on prices from retailers, higher input costs and to changes in consumer demand.

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