ATLANTA (AP) - Food maker ConAgra Foods on Tuesday reported fiscal second quarter net income fell 15 percent but results beat expectations as the company raised prices to offset continuing higher prices.
ConAgra Foods Inc., like many food companies, is dealing with higher costs for ingredients, packaging and fuel and has raised its prices to offset those increases.
"The marketplace environment remains difficult due to continuing inflationary pressures and the impact of the current economy on consumers, so we are cautious about business conditions," said CEO Gary Rodkin.
But Rodkin acknowledged price increases were helping offset higher prices.
"We're not declaring victory, but we're making good progress," he said during a call with analysts.
The results for the Omaha, Neb. company were better than analysts expected and ConAgra reaffirmed its fiscal 2012 guidance. Shares rose 4 percent in midday trading.
The maker of Slim Jim, Chef Boyardee and other packaged foods says net income fell 15 percent to $171.8 million, or 41 cents per share. That compares with $200.9 million or 46 cents per share a year ago. Excluding one-time items related to derivatives and restructuring, net income was 47 cents per share. That's ahead of the 43 cents per share analysts expected, according to a poll by FactSet.
Revenue during the 13 weeks ended Nov. 27 rose 8 percent to $3.4 billion from $3.15 billion last year. Analysts expected $3.34 billion.
Sales of branded consumer foods, the company's largest division that makes up 63 percent of sales, rose 4 percent to $2.18 billion.
Top sellers were Banquet, Chef Boyardee, Hunt's, Marie Callender's, Orville Redenbacher's and others.
Sales of commercial foods, which make up 37 percent of sales, rose 16 percent to $1.23 billion, as the company raised prices because of higher wheat and potato costs.
Results from its Lamb Weston potato division improved due to cost cutting and higher volume.
ConAgra's outlook sees adjusted fiscal 2012 earnings per share growth in the low- to mid-single digit percentage range, with most growth concentrated in the fourth quarter, helped by higher prices and acquisitions.
After a failed bid for Ralcorp Holdings Inc., which makes Post cereal and a variety of store-brand foods, ConAgra has attempted to expand with smaller acquisitions.
In November it said it would pay $10 million to an unnamed third party become the majority owner of Indian food company Agro Tech Foods Ltd. to broaden its international presence. It completed its acquisition of pretzel maker National Pretzel Co. from Brookstone Holdings earlier this month.
"We continue to pursue growth through acquisitions," said John Gehring, chief financial officer. "While the timing of acquisitions depends on a number of factors, not all of which we control, we will continue to pursue opportunities where there is a strategic fit and a good financial return."
"We think progress made by ConAgra will lead to it being viewed as more of a growth business," said S&P Capital IQ equity analyst Tom Graves. "We expect acquisition activity to be part of its future growth strategy."
He raised his opinion on the foodmaker to "Buy" from "Hold.".