US food giant ConAgra, which yesterday announced record profits, will now be waiting for the financial year's end to assess the negative impact the recently confirmed sale of its processed meats division will have.
Yesterday the company reaped the benefits of its shift towards branded foods when it reported a 21 per cent rise in net income. This came in spite of a 7 per cent fall in first quarter revenues to $7.1 billion (€7.2m).
Bruce Rohde, chairman and chief executive, reported that ConAgra's primary strength had been its packaged foods division. "It demonstrates we are doing the right thing with building brands and we are continuing to operate efficiently."
The company has been making moves away from commoditised agricultural products, such as meat, and slowly strengthening its position in the packaged foods sector.
The financial results come just one day after ConAgra announced that the sale of its fresh beef and pork operations to a venture led by Hicks Muse Tate & Furst and Booth Creek Management was confirmed at $1.4 billion.
ConAgra said that the sale would reduce its 2003 earnings by about 12 cents to 15 cents a share due to transaction costs and the dilutive nature of the deal.
ConAgra's results, which beat expectations, were bolstered by the delay in the sale of its meat processing business. The sale of the meats division has caused the company no small amount of headaches because of the July recall of 19 million pounds of fresh and frozen beef among fears of an E. coli breakout.
In spite of the strength of packaged foods, where operating profit rose 12 per cent to $357 million on sales down 3 per cent at $2.9 billion, ConAgra's other divisions fared less well. Hit by the food poisoning, sales in its meat processing unit fell 7 per cent to $2.5 billion, while operating profit declined from $80 million to $67 million.
Jim O'Donnell, finance director, said he expected ConAgra to reduce debt by about $1 billion during the year.