ConAgra Foods News Release
FOR IMMEDIATE RELEASE
CONAGRA FOODS EXPECTS ENERGY COSTS
AND OTHER NEAR-TERM ECONOMIC CONDITIONS
TO IMPACT FISCAL 2001 OPERATIONS
OMAHA, Neb., Feb. 13, 2001 - ConAgra Foods (NYSE: CAG), one of America's leading
branded food companies, today announced that sharply higher energy costs and a
slowing economy are altering the company's near-term earnings outlook. While the
company still expects to report overall growth in EBIT and EBITDA for the full
fiscal year, the company is revising its earnings outlook for the balance of
fiscal 2001, which ends May 27, 2001. Despite double-digit earnings gains for
the first half of fiscal 2001, energy costs, a slowing economy, and aggressive
investment to grow its business are reducing earnings expectations.
The company said that because of the sudden, sharp rise in energy costs, its
risk-mitigating activities were only able to offset part of the increase. Bruce
Rohde, chairman and chief executive officer, commented, "Higher energy costs
have an across-the-board impact on everything from production and warehousing to
transportation, distribution and other costs of doing business."
- MORE -
CONAGRA FOODS EXPECTS ENERGY COSTS AND OTHER NEAR-TERM
ECONOMIC CONDITIONS TO IMPACT FISCAL 2001 OPERATIONS
PAGE 2
Mr. Rohde said that preliminary estimates are that these additional costs could
be as much as $150 million on a pretax basis, or about $.17 cents per share
after tax. He added, "Were it not for the company's hedging efforts, costs would
have been even higher."
Mr. Rohde said that a variety of factors, including harsh winter weather,
uncertainty over farm policy, and other farming-related factors have changed
management's outlook for the crop input business over the balance of fiscal
2001. "Ordinarily, we experience significant margins in the second half of our
fiscal year, but these issues are having a ripple effect on the entire supply
chain," he noted. The company expects these factors to reduce second half-pretax
profits by approximately $110 million, or about $.13 per share after tax. This
should result in an overall decline in full fiscal-year profitability for the
Agricultural Products reporting segment, despite a substantial gain in
profitability during the first half of fiscal 2001.
As previously disclosed, ConAgra Foods has significantly increased its
investment in the promotion, distribution, and improvement of many of its food
products. These expenses are concentrated in the fiscal third quarter, currently
under way, with the balance of these investments to be expensed in the fourth
quarter. The company views these investments as long-term consumer franchise
enhancement activities with results expected over a 12- to 24-month period. As
such, these expenditures are expected to reduce second half-pretax profits in
the range of $85 million, or $.10 per share after tax.
- MORE -
CONAGRA FOODS EXPECTS ENERGY COSTS AND OTHER NEAR-TERM
ECONOMIC CONDITIONS TO IMPACT FISCAL 2001 OPERATIONS
PAGE 3
ConAgra Foods now expects fiscal third quarter earnings to be in the range of
$.18 to $.20 per share. The company expects fiscal fourth quarter earnings to be
in the range of $.39 to $.41 per share, while earnings for all of fiscal 2001
are expected to be in the range of $1.46 to $1.50 per share. These estimates
exclude any impact of accounting changes which the company is currently
reviewing.
"On a macro basis, recent economic news and consumer confidence data are
consistent with slowing GDP growth," Mr. Rohde said. "Not unlike similar periods
in the early 1980s and 1990s, we anticipate that the slowdown will be temporary
and that the economy will snap back relatively quickly. A great attribute of the
food business is that consumers continue eating through these times, although
their purchasing patterns may shift or their pantry levels may fluctuate. Our
near-term efforts will focus on aggressively marketing our portfolio of
products, reducing costs, and becoming more efficient throughout our company."
"There may be some challenges ahead, but we have made considerable progress
accelerating growth in a number of our key businesses this fiscal year. While
some customers are under pressure to reduce inventory levels, consumption
patterns and market shares for many of our key products are solid and
improving."
- MORE -
CONAGRA FOODS EXPECTS ENERGY COSTS AND OTHER NEAR-TERM
ECONOMIC CONDITIONS TO IMPACT FISCAL 2001 OPERATIONS
PAGE 4
ConAgra Foods, Inc. (NYSE : CAG) is North America's largest foodservice
manufacturer and second largest retail food supplier, with annualized sales of
approximately $27 billion. ConAgra Foods' consumer brands include: Hunt's tomato
products, Healthy Choice, Banquet meals, Armour meats, Bumble Bee tuna, Louis
Kemp seafood, La Choy, Chun King, Lunch Makers, Wesson, Country Pride, Blue
Bonnet, Kid Cuisine, Parkay, Reddi-wip, Marie Callender's, Cook's ham,
Butterball, Act II, Slim Jim, Decker, Chef Boyardee, Orville Redenbacher's, PAM
Cooking Spray, Snack Pack puddings, Van Camp's, Peter Pan, Hebrew National,
Gulden's mustard, Pemmican Jerky, Swift Brown 'n Serve Sausages, Swiss Miss, and
many others. For more information, please visit us at www.conagrafoods.com.
Management Comments
Comments by ConAgra Foods management relating to this press release will be made
available at 5:00 PM, Eastern Standard Time. To access the discussion, call toll
free at 1-888-868-9080. On the Internet, you may access the discussion at
http://www.videonewswire.com/ConAgraFoods/021300. A replay of the discussion
will be available after 6:00 PM Eastern Standard Time at 1-888-693-3416. The
company has posted question and answer information relating to this release and
an audio archive of management's discussion at http://www.conagrafoods.com/
investors.
- MORE -
CONAGRA FOODS EXPECTS ENERGY COSTS AND OTHER NEAR-TERM
ECONOMIC CONDITIONS TO IMPACT FISCAL 2001 OPERATIONS
PAGE 5
ConAgra Foods' press releases are available through PR Newswire's Company News
On Call Fax Services at 1-800-758-5804, extension #200825. There is no charge
for this service. Also, see ConAgra Foods' web site for recent news at
http://www.conagrafoods.com.
Note on Forward Looking Statements
This news release contains forward-looking statements that reflect management's
current views and estimates of future economic circumstances, industry
conditions, company performance, and financial results. The statements are based
on many assumptions and factors described in the company's reports filed with
the Securities and Exchange Commission including availability and prices of raw
materials, product pricing, competitive environment and related market
conditions, operating efficiencies, access to capital and actions of
governments. Any changes in assumptions or factors could produce significantly
different results.
####