FOR IMMEDIATE RELEASE
CONAGRA FOODS COMMENTS ON FISCAL 2005 FOURTH QUARTER
AND COST-SAVINGS INITIATIVES
OMAHA, Neb., June 7, 2005 -- Today ConAgra Foods (NYSE: CAG) commented on
earnings for the fiscal 2005 fourth quarter, which ended May 29, 2005, as well
as recent developments in its cost-savings initiatives.
Fourth Quarter
Earnings for the company's fiscal 2005 fourth quarter will be lower than
expected primarily due to continued weak profitability in the packaged meats
operations. Those operations continue to be negatively impacted by high protein
input costs coupled with inadequate pricing management.
o In its preliminary third quarter earnings release on March 24, 2005, the
company indicated that it expected fourth-quarter EPS to modestly exceed
third-quarter EPS, excluding items that impact comparability.
o Third-quarter diluted EPS of $0.32 included net $0.02 per share of
expense from items that impact comparability.
o Because the expected improvement in the packaged meats business did not
materialize, contribution from the packaged meats operations in the fourth
quarter will be in the range of $0.10 per share lower than the company expected
when it made previous comments regarding the fourth quarter. The company is not
providing a specific fourth-quarter performance number at this time because the
results are not yet final; however, the company suggests third parties with
estimates of fourth-quarter performance, which exclude items that impact
comparability, should lower their estimates by an amount similar to the earnings
shortfall in the packaged meats operations. Items that impact comparability will
include severance charges associated with cost-savings initiatives as discussed
later in this document.
The company previously expected aggressive pricing management to improve
packaged meats results in the fourth quarter. The pricing actions that were
taken were inadequate and were not executed to expectations. The company has
recently made several significant personnel changes in its packaged meats
operations and expects those changes, along with better pricing management,
aggressive cost-savings initiatives, and SKU rationalization, to improve the
packaged meat operations over time.
Bruce Rohde, chairman and chief executive officer, commented, "Our fiscal
2005 showed a solid first-half performance, followed by a weak second-half
performance largely due to the challenges in our packaged meats business across
retail, foodservice, and deli channels. Weak pricing execution negatively
impacted our third quarter and continued in the fourth quarter. Our focus is on
improving the packaged meat operations with new leadership team members,
appropriate pricing, SKU reductions, and more efficient operations."
He continued, "ConAgra Foods has some great packaged meat brands, such as
Butterball, Armour, Eckrich, Healthy Choice, Hebrew National, and Brown 'N
Serve, and we will take the necessary actions to help these fine brands return
to normal profitability."
The company will provide details on its fourth-quarter performance in its
regularly scheduled earnings release on June 30, 2005.
Recent Developments in Cost-Savings Initiatives
As previously communicated, the company is actively pursuing SKU and
manufacturing rationalization opportunities over the next several quarters as
part of business process improvement and efficiency initiatives. The company
continues to identify ways to be more efficient and improve customer service
across its sales, marketing, manufacturing, logistics, R&D, and administrative
functions throughout the organization.
As part of these ongoing efficiency initiatives, the company is reducing
general and administrative expense as well as salaried headcount. The company is
in the process of eliminating several hundred salaried jobs across the
organization; these headcount reductions will be largely complete by the end of
the first quarter of fiscal 2006, which ends August 2005. Once completed,
savings from the headcount and general and administrative cost reductions are
expected to benefit the company's anticipated cost structure by more than $100
million on an annualized basis. The company will detail the accrued severance
costs recorded in the fourth quarter of fiscal 2005, and any other items that
impact comparability, in the June 30, 2005, fourth-quarter earnings release.
Rohde commented, "Our company continues to be very focused on operating
efficiencies to improve profit margins and returns on capital. Headcount
reduction is very difficult because of the impact on employees and their
families, but unfortunately it is a necessary part of creating efficient
operations." He continued, "These headcount reductions are expected to provide
significant future savings and reduce complexity in our business, which is
necessary for profitable growth and shareholder value. We will continue to
aggressively identify opportunities to be more efficient, and to take
appropriate actions when necessary to achieve the efficiencies."
# # #
ConAgra Foods Inc. (NYSE: CAG) is one of North America's largest packaged
food companies, serving consumer grocery retailers, as well as restaurants and
other foodservice establishments. Popular ConAgra Foods consumer brands include
ACT II, Armour, Banquet, Blue Bonnet, Brown 'N Serve, Butterball, Chef Boyardee,
Cook's, Crunch 'n Munch, DAVID, Decker, Eckrich, Egg Beaters, Fleischmann's,
Gulden's, Healthy Choice, Hebrew National, Hunt's, Kid Cuisine, Knott's Berry
Farm, La Choy, Lamb Weston, Libby's, Lightlife, Louis Kemp, Lunch Makers, MaMa
Rosa's, Manwich, Marie Callender's, Orville Redenbacher's, PAM, Parkay,
Pemmican, Peter Pan, Reddi-wip, Rosarita, Ro*Tel, Slim Jim, Snack Pack, Swiss
Miss, Van Camp's, Wesson, Wolf and many others. For more information, visit
www.conagrafoods.com.
Note on Forward-Looking Statements:
This news release contains forward-looking statements within the meaning of
the Private Securities Litigation Reform Act of 1995. These statements are based
on management's current views and assumptions of future events and financial
performance and are subject to uncertainty and changes in circumstances. Readers
of this release should understand that these statements are not guarantees of
performance or results. Many factors could affect the company's actual financial
results and cause them to vary materially from the expectations contained in the
forward-looking statements. These factors include, among other things, future
economic circumstances, industry conditions, company performance and financial
results, availability and prices of raw materials, product pricing, competitive
environment and related market conditions, operating efficiencies, access to
capital, actions of governments and regulatory factors affecting the company's
businesses and other risks described in the company's reports filed with the
Securities and Exchange Commission. The company cautions readers not to place
undue reliance on any forward-looking statements included in this release, which
speak only as of the date made.