Buoyed by its 2013 private brands acquisition, ConAgra Foods saw third-quarter net income nearly double despite sales declines in its consumer and commercial foods businesses.
The Omaha-based manufacturer on Thursday reported net third-quarter income of $234.3 million, or 55 cents per share, up from $120 million, or 29 cents per share, a year ago.
Private brand sales, lifted by the firm's acquisition of Ralcorp Holdings, were $1.06 billion, contributing to total quarterly sales of $4.4 billion, up 14.5 percent from the year before. Still, ConAgra said the private brand segment's performance is “below plan” because of issues it has previously disclosed and is working to improve, including poor sales force organization and price cuts.
Sales of consumer foods in the quarter ending Feb. 23 fell 3.5 percent to $1.87 billion. Commercial foods sales fell 0.7 percent to $1.46 billion.
Consumer brands posting sales growth included Bertolli pasta, Hebrew National hot dogs and Slim Jim meat snacks. ConAgra said three of its largest brands -- Healthy Choice, Orville Redenbacher's and Chef Boyardee -- continue to struggle and posted “substantial volume declines,” as it had previously projected. ConAgra is implementing product changes, in-store initiatives and new marketing messages to combat the decline.
Adjusting for items affecting comparability, ConAgra reported earnings per share of 62 cents, compared to 55 cents the prior year, up 13 percent. Those items included costs related to the Ralcorp acquisition, as well as costs and benefits of hedging activity.
ConAgra said it is on track to meet its most recent full-year earnings projections of $2.22 to $2.25 per share in fiscal 2014. Expectations were lowered in February, with ConAgra citing the issues turning around the Ralcorp business and its declining consumer foods sales.
ConAgra also said Thursday its Ardent Mills joint venture still is expected to close by June 30. The transaction has been postponed twice due to an ongoing regulatory review.