Thursday, packaged food company ConAgra Foods, Inc., (CAG) said third-quarter net income declined from last year, reflecting a 99% plunge in earnings from discontinued commodity trading operations. However, profit from continuing operations increased from the year-ago period, helped by sales growth at its Consumer Foods segment. Further, the company reaffirmed its expectations for fiscal 2009 earnings per share from continuing operations.

The Omaha, Nebraska-based company's net income for the quarter declined to $193.2 million or $0.43 per share from $309.1 million or $0.63 per share reported in the same period of previous fiscal.

Income from continuing operations increased to $191.2 million or $0.43 per share from $167.5 million or $0.34 per share in the previous year. Excluding $0.03 per share of net benefit in the current quarter from items impacting comparability, earnings per share from continuing operations grew to $0.40 from $0.34 in the year-ago period.

On average, nine analysts polled by Thomson Reuters expected third-quarter earnings of $0.36 per share. Analysts' estimates typically exclude special items.

Income from discontinued operations were only $2 million in the just concluded period, compared to $141.6 million reported in the prior year. The company sold its commodity-trading unit in June 2008 for about $2.8 billion to Ospraie Management LLC.

Net sales grew to $3.135 billion from $2.955 billion reported last year. Wall Street expected revenues of $3.11 billion.

The Consumer Foods segment posted third-quarter sales of $2.014 billion, up from $1.921 billion in the previous year. Consumer Foods' comparable sales growth was 5%, reflecting 10% contribution from pricing and mix, partially offset by a 4% drop in unit volume and a 1% negative impact from foreign exchange. A major portion of the volume decline was attributable to two brands - ACT II popcorn and Peter Pan peanut butter.

For fiscal third quarter, sales for the Commercial Foods segment were $1.121 billion, up 8% from last year, primarily due to higher sales at Lamb Weston and, to a lesser extent, at ConAgra Mills.

Among others in the industry, H.J. Heinz Co. (HNZ) last month said profit for the third quarter increased 11% from last year, driven by gains from currency hedging as well as a lower effective tax rate. Heinz reported net income of $242.26 million for the third quarter, 11% higher than $218.53 million in the prior-year quarter. Earnings per share rose 12% to $0.76 from the year-ago quarter's $0.68. Sales decreased 7.5% to $2.41 billion from $2.61 billion in the same quarter last year.

For the second quarter of fiscal 2009, ConAgra had reported a 31.3% decline in profit from the year-ago period, to $168.1 million or $0.37 per share from $244.8 million or $0.50 per share in the corresponding quarter last year. Net sales for the quarter increased 10.6% to $3.26 billion from $2.95 billion in the comparable period last year.

For the nine-month-period, ConAgra's net income increased to $803.7 million or $1.76 per share from $729.3 million or $1.48 per share in the prior year. Net sales climbed to $9.465 billion from $8.528 billion.

Looking ahead, the maker of Banquet frozen dinners and Slim Jim snacks reaffirmed its expectations for fiscal 2009 earnings per share from continuing operations to be slightly above $1.50, excluding items impacting comparability. Analysts expect the company to report earnings of $1.47 per share for fiscal 2009. The company had reaffirmed this outlook in December 2008 as well as last month.

Gary Rodkin, ConAgra's chief executive officer, said, We expect both of our operating segments to perform well in the fourth quarter and for supply chain savings and SG&A efficiencies to continue to be strong, resulting in fiscal 2009 EPS of slightly above $1.50, excluding items impacting comparability.

Recently, Kraft Foods Inc. (KFT), the world's second largest food-maker, lowered its GAAP earnings per share outlook for 2009, citing a greater-than-anticipated negative impact from currency and pension costs, significantly offset by improved business performance.

For the fourth quarter, ConAgra expects stronger comparable year-over-year operating profit improvement for Consumer Foods segment, primarily due to an expected moderation of inflation, favorable cost savings trends, new product traction in the marketplace, ongoing transformation of the frozen foods operations, and the benefit of an extra week.

The company expects the Commercial Foods segment to post strong operating profit results in the fiscal fourth quarter based on the momentum in the milling operations, expectations for continued solid top-line performance at Lamb Weston, and the benefit of an extra week.

ConAgra had said last month that it expects more earnings to be generated in its fiscal fourth quarter spread over March, April and May, than the fiscal third quarter.

CAG closed Wednesday's regular trade at $15.56, up from the previous close of $15.42, on 6.55 million shares. For the past year, the stock fluctuated in the range of $13.52-$24.87.

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