UPDATE:ConAgra: Higher Commodity Costs Still A Factor In FY09
2009年2月18日 - 3:51AM
Dow Jones News
While some commodity costs have abated from recent highs,
ConAgra Food Inc.'s (CAG) Chief Financial Officer John Gehring said
price inflation will continue to factor into the company's strategy
this year.
Certain commodity costs have fallen - including edible oils,
energy and grains - but aggregate input costs are still higher than
last year, Gehring said Tuesday at the Consumer Analyst Group of
New York Conference being held in Boca Raton, Fla.
Proteins, vegetables and steel are still feeling continued cost
pressures, he said.
ConAgra expects raw material costs to be around $500 million for
its consumer foods division in fiscal year 2009, up from $480
million in fiscal 2008, and $160 million in fiscal 2007.
"To be clear, we are not planning for net deflation but lower
rates of inflation," Gehring said.
To counter rising raw material costs, food companies have had to
raise prices in recent months. Gehring said he expects net fiscal
2009 price increases to be still significant, even after
merchandising and promotion adjustments.
However, all commercial foods businesses prices should continue
to recover the cost of inflation, he said.
In particular, ConAgra has had to deal with aggressive price
promotions from some competitors in the frozen food category in
recent months, which has hurt the segment's overall profitability.
In general, ConAgra hasn't lowered its frozen food prices, instead
focusing on product innovation and introducing new packaging, in
particular for its Healthy Choice products.
Soleil Securities analyst Edgar Roesch sees this as a good
long-term strategy for the company.
"They are not trying to instigate any significant broad-based
price competition," Roesch said. "It's keeping with the longer-term
aim for the category which is to get away from strong promotion and
move it more towards a quality branding proposition."
ConAgra, whose brands include Hunt's ketchup and Healthy Choice
frozen meals, reiterated its earnings-per-share guidance of
slightly above $1.50 from continuing operations for fiscal
2009.
For fiscal 2010, the company is planning for "healthy"
share-earnings growth, driven by consumer foods innovation and
moderating inflation. However, it expects the food service
environment to be challenging.
In December, the food maker reported a decline in fiscal
second-quarter net income due in part to hedging markdowns.
Shares of ConAgra recently changed hands at $16.32, up 10 cents
or 0.6%.
-By Kelly Nolan; Dow Jones Newswires; kelly.nolan@dowjones.com;
201-938-4049