Omaha, NE - ConAgra, Inc. reported results for fiscal year 1998's third quarter and first nine months ended February 22, 1998.
For fiscal 1998's first nine months, before a required accounting change, diluted earnings per share increased 7% to $1.00 from 93.4 cents a year ago, and basic earnings per share increased 8% to $1.022 from 94.9 cents. In fiscal 1998's third quarter, before the required accounting change, diluted earnings per share decreased 5% to 30.0 cents from 31.6 cents in last year's third quarter, and basic earnings per share decreased 5% to 30.6 cents from 32.1 cents. This is consistent with ConAgra's February 13, 1998 announcement saying the company expected fiscal 1998 second half earnings per share would be flat to down moderately.
During fiscal 1998's third quarter, ConAgra implemented a new Financial Accounting Standards Board directive specifying how all companies will account for certain business systems reengineering costs. Including a one-time, non- cash provision of $14.8 million after tax for this accounting change, fiscal 1998 third quarter diluted and basic earnings per share were 26.8 cents and 27.3 cents respectively, and fiscal 1998 nine month diluted and basic earnings per share were 96.8 cents and 98.9 cents respectively.
ConAgra's president and chief executive officer, Bruce Rohde, commented, "We're pleased with good performance by many of ConAgra's businesses from crop inputs to consumer products including Healthy Choice, a substantial earnings plus so far this year. However, excess supply and lower Asian export demand are depressing prices and margins in the U.S. fresh meat and poultry industry and constraining ConAgra's aggregate results."
In ConAgra's Grocery & Diversified Products industry segment, operating profit was up 7% in the third quarter and 6% in the first nine months of fiscal 1998 versus the same periods in fiscal 1997. Segment sales increased 2% in the third quarter and first nine months.
Bolstered by good third quarter unit volume growth, ConAgra Frozen Foods achieved double-digit operating profit growth in fiscal 1998's third quarter and first nine months. The potato products business and the seafood business both boosted third quarter and nine month earnings. In shelf-stable foods, Golden Valley increased third quarter and nine month earnings significantly, while Hunt-Wesson's operating profit declined moderately in both periods.
In ConAgra's Food Inputs & Ingredients industry segment, operating profit grew 11% in the third quarter and 20% in the first nine months of fiscal 1998 versus the same periods in fiscal 1997. Segment sales increased 1% in the third quarter and were up slightly through nine months. Adjusted for a fiscal 1998 first quarter business divestiture, lower commodity price levels this year and acquisitions, segment sales were up 8% in the third quarter and 4% through nine months.
ConAgra's major crop inputs business, United Agri Products, enjoyed significant sales growth and strong operating profit growth in fiscal 1998's third quarter and first nine months. The specialty food ingredients and commodity services businesses registered substantial earnings growth in both periods. Soft international demand drove earnings decreases in grain merchandising and fertilizer trading in both periods.
In ConAgra's Refrigerated Foods industry segment, operating profit decreased 92% in the third quarter and 29% in the first nine months of fiscal 1998 versus the same periods in fiscal 1997. Segment sales decreased 4% in the third quarter and 3% through nine months. Adjusted for business dispositions, acquisitions and lower commodity selling price levels, sales were up 3% in the third quarter and 1% through nine months.
The branded processed meats, Australia beef and cheese businesses all increased operating profit in fiscal 1998's third quarter and first nine months versus the same periods in fiscal 1997. These gains were far more than offset by depressed results in U.S. fresh meat and poultry.
A surge in industry production, compounded by lower Asian export demand, drove earnings down in pork, poultry and U.S. beef in both periods. The earnings decline was especially severe in beef because beef processing and cattle feeding, which often naturally hedge each other's results, both suffered price and margin compression.
For ConAgra in total, before the accounting change, fiscal 1998 third quarter net income decreased 4.5% to $138.6 million from $145.1 million, and nine month net income increased 7% to $459.3 million from $428.5 million. Including the accounting change, fiscal 1998 third quarter net income was $123.8 million, and nine month net income was $444.5 million. ConAgra's fiscal 1998 third quarter sales decreased 1% to $5.39 billion from $5.46 billion. Nine month sales decreased 1% to $17.96 billion from $18.21 billion. Adjusted for business dispositions, acquisitions and lower commodity selling prices, fiscal 1998 third quarter sales increased 3% and nine month sales increased 2%.
ConAgra's effective tax rate is lower this year. The rate for all of fiscal 1998 is expected to be 38.5%, as it was for the first nine months of fiscal 1998, compared with 39.6% for the full fiscal year 1997.
The new diluted earnings per share and ConAgra's previously reported earnings per share are comparable. Earnings per share figures reflect ConAgra's two-for-one common stock split in October 1997.
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