Today ConAgra Foods (NYSE:CAG) is announcing that comparable fiscal 2014 fourth quarter earnings per share (EPS) will be below prior expectations. While all financial details are not yet finalized and the results in today’s release are preliminary, diluted per share performance from continuing operations for the fiscal 2014 fourth-quarter, which ended on May 25, 2014 and will be reported in more detail on June 26, 2014, is expected to be approximately $(0.76) as reported, reflecting significant non-cash impairment charges as well as other items impacting comparability. After adjusting for items impacting comparability, fiscal 2014 fourth-quarter EPS is expected to be approximately $0.55; the company’s previous guidance anticipated comparable EPS slightly in excess of $0.60 for the quarter. The lower-than-planned comparable EPS is largely the result of a 7% quarterly volume decline for the Consumer Foods segment, as well as weak profits for the Private Brands segment. Items impacting comparability are detailed on page 5 of this document.
Gary Rodkin, CEO of ConAgra Foods, commented, “We are disappointed with the Consumer Foods volume performance, which negatively impacted comparable EPS. As we have communicated, we are in the process of improving product mix and promotion strategies in the Consumer Foods segment for better results and greater effectiveness, and we expect our volume performance to improve in fiscal 2015 as a result of this. Given the profit challenges in our Private Brands segment, we are also focused on margin improvement initiatives to offset the impact of pricing concessions. Even though our earnings are below expectations, we exceeded our fiscal 2014 operating cash flow and debt reduction targets.”
He continued, “Given the challenges we faced in fiscal 2014 with regard to Consumer Foods volumes and Private Brands profitability, we are in the process of gradually strengthening several areas of our company. We anticipate fiscal 2015 to be a year of stabilization and recovery that delivers mid-single-digit comparable EPS growth. Comparable EPS growth in fiscal 2016 and 2017 should accelerate to a high-single-digit rate as we benefit from stronger underlying operations, generate sizeable productivity and administrative savings, and continue to realize substantial synergies from the Ralcorp transaction. Administrative savings are expected to play a growing role in future EPS performance as we implement effectiveness and efficiency initiatives resulting from significant work over the past fiscal year. Throughout this period of anticipated stabilization, recovery, and eventual acceleration of EPS performance, we expect to have the flexibility to invest in our business for good long-term growth. We plan to continue our current $1.00 per share annual dividend payment, and remain committed to a strong dividend policy in the future.”