ConAgra profit tops estimates

ConAgra Foods Inc. reported profits that topped estimates on Tuesday, helped by cost-cutting and lower commodity expenses as the company shifts to healthier, less processed foods that consumers want.

After facing pressure this year from activist hedge fund Jana Partners LLC, ConAgra announced a major restructuring, including the sale of its private-label unit - which has a plant in Cedar Rapids - and a spinoff of its Lamb Weston frozen potato products business. It also is cutting about 1,500 jobs as part of a plan to save at least $300 million in three years.

ConAgra owns JM Swank, which has operations in the Corridor.

Food companies are struggling to grow in the United States, their biggest market, as consumers opt for fresher, healthier products instead of well-known packaged brands.

ConAgra reported lower-than-expected revenue for the third straight quarter as sales in its consumer foods business, which includes Chef Boyardee pasta and Healthy Choice frozen dinners, fell 3 percent in the second quarter, ended Nov. 29.

Still, operating profit in the segment grew 10 percent, helped by higher prices and lower commodity costs, which offset increased investment in marketing and the impact of a strong dollar.

Net income attributable to the company rose to $154.9 million, or 35 cents per share, in the quarter, from $10 million, or 2 cents per share, a year earlier.

A year ago the company recorded a $202.8 million loss from its private-label unit.

Excluding items such as an aftertax benefit related to the divestiture of its private-label operations, ConAgra earned 71 cents per share. Analysts expected 62 cents a share, according to Thomson Reuters I/B/E/S.

Akshay Jagdale, an analyst at Jefferies, said the results were better than he expected in the consumer foods segment and its commercial foods business, where operating profit rose 11 percent.

Total sales fell 1.4 percent to $3.09 billion, missing the average analyst estimate of $3.34 billion, according to Thomson Reuters I/B/E/S.

The company sees current-quarter adjusted profit 'modestly higher” from a year earlier.