ConAgra Foods, one of the leading food processors in the US, has reported a 58.7 per cent profit increase for its fourth quarter, beating Wall Street estimates on higher sales of major packaged food brands.
The nation's second largest food company behind Philip Morris Co.'s Kraft Foods earned $192 million (€193.5m), for the period ended May 26, up from $121 million in the same period last year.
Chief executive Bruce Rohde said the company expects earnings per share for 2003 to exceed analysts expectations by around 7 per cent.
Conagra's fourth-quarter sales were steady at $6.4 billion, about the same as a year ago.
Sales of packaged foods rose 6 per cent, ConAgra said, while sales declined in its meat processing, food ingredients and agricultural products divisions.
It has emphasised its branded foods for the last few years, and in May announced the sale of its fresh beef and pork processing division to a group of investors, while retaining a significant minority stake in those businesses.
Part of that emphasis has been expanded advertising, strategic placement of related food products in grocery stores and higher prices for higher-premium foods.
"This is the best performance from packaged foods in a long time," said David Nelson, an analyst at CS First Boston.
Time will tell, however, Nelson said, as to how well ConAgra manages its shift into a food company and away from agricultural products.
"There's nothing necessarily bad about the meat business," Nelson said of ConAgra's sale of its beef and pork division. "You just have to be able to run them well. They were having trouble in the last decade, so it's best to move on."
ConAgra may be looking at sales of its agricultural products and chicken processing businesses as well, Nelson said.
Analyst William Leach with Banc of America Securities said ConAgra probably will try to sell its other agricultural operations. Investors don't like the volatility of commodities mixed with the stability of packaged foods, Leach said.
For the year, ConAgra had net income of $783 million, up from $638 million a year ago. Revenue rose to $27.6 billion from $27.1 billion a year earlier.